Report: Gávea’s Pricetag Could Hit $1B

Oct 28 2010 | 4:15am ET

Highbridge Capital Management is paying US$270 million for its 55% stake in Brazilian hedge fund Gávea Investimentos, Brazilian media reports.

The JPMorgan Chase hedge fund unit struck a deal for the Rio de Janiero-based firm yesterday, but did not disclose terms. But Valor Economico said that the final price for Gávea, which manages about US$6 billion, could reach US$1 billion as Highbridge increases its stake in the firm and depending on Gávea’s performance.

Gávea CEO Amaury Bier dismissed the Valor Economico figures at “speculations.”

“The value will depend on our performance and will go as far as the eye can see, as long as it would be reasonable,” Bier told Bloomberg News. “The value of resources managed by Gavea will fall by about US$1 billion, which is from private banking, to about US$5 billion.”

Bier added that the terms of the deal allow Highbridge to buy half of the 45% it doesn’t own within three years, and the remaining 22.5% within five years.

"Before the deal, Highbridge's exposure to Brazil was essentially zero. So with this transaction, we'll have the opportunity to become invested in one of the fast-growing economies in the world with an ideal local partner," Highbridge CEO Glenn Dubin told The Wall Street Journal.

"Initially, we will allocate a modest percentage of capital to Gavea's global macro trading, giving our clients access to one of the world's great global macro specialists. Over time, we expect to increase this allocation in line with our other core strategies—global equities, credit, Asia and quantitative trading—and to develop Brazil-specific products with the Gávea team."

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