Ex-BTG Partners to Deploy $650 Million for ‘Complex Situations’

(Bloomberg) -- Prisma Capital Ltda., the alternative-asset manager created by former Banco BTG Pactual SA partners, is hunting for “complex situations” in Brazil to invest about $650 million raised for its third fund.

“We have a flexible mandate that allows us to invest in a range of asset classes and securities, including private or public equities, credit, real estate, companies under bankruptcy protection and claims,” Marcelo Hallack, a Prisma co-managing partner, said in an interview. “The dysfunctions present in Brazil’s political, legal and tax systems, which chronically result in macroeconomic volatility, also create investment opportunities.” 

Brazilian corporations are struggling to access capital amid a steep increase in the nation’s benchmark interest rate, which has soared to 10.75% from 2% a year ago. A virtual halt in economic activity and shrinking capital markets are adding to the pressure, as are Russia’s invasion of Ukraine and Brazil’s looming presidential election in October. Brazil’s economy is expected to grow just 0.5% this year, down from 4.6% in 2021, according to forecasts compiled by Bloomberg.

During these kinds of economic cycles, banks typically become more cautious in providing credit, and that increases the demand for the kinds of capital solutions that Prisma can provide, said Lucas Canhoto, a co-managing partner of Sao Paulo-based Prisma.

Prisma has competition in its search for opportunities. Jive Investments, Brazil’s largest distressed-asset manager, plans to raise as much as 7 billion reais ($1.4 billion) for a new fund this year, Guilherme Ferreira, a Jive partner, said in a interview last year. And Mubadala Capital, Abu Dhabi’s sovereign wealth fund, said in February that it’s received commitments of $322 million for its Brazil Special Opportunities Fund I, its first in Brazil, according to a statement.

Prisma can invest in any industry, and so far has chosen sectors including infrastructure, energy, real estate, telecommunications, oil, gas and technology. The firm’s funds also invest in legal claims and litigation finance.

Among its holdings are Bionexo, a fast-growing health-care technology firm that also received investments from Singapore’s sovereign wealth fund, Temasek, in 2018 and private equity firm Bain Capital in late 2021. Prisma also manages a listed renewable energy fund, Prisma Proton Energia FIP.

“Our investment process focuses on downside protection, either through a margin of safety in terms of entry-point prices, or through collateralization via structuring,” said Joao Mendes, also a co-managing partner of Prisma.

Prisma Holdings

As an example, in 2021 Prisma invested alongside Brookfield Asset Management and Farallon Capital Management in a 2.5 billion-real bridge loan for the sale of fiber infrastructure assets from telecommunications company Oi SA. Prisma also led a transaction to finance Brazilian entrepreneur Nelson Tanure in his 2.4 billion-real acquisition of Copel Telecom, the state of Parana’s recently privatized telecommunications company.

In the oil and gas sectors, Prisma started buying bonds in 2020 issued by the distressed OSX Leasing, gaining rights to own the vessel FPSO OSX-3 and a stake in Dommo Energia SA, formerly OGX Petroleo & Gas Participacoes SA. FPSO was subsequently sold to PetroRio SA, which used a $100 million loan from Prisma for that acquisition as well as for the purchase of the Tubarao Martelo oil field.

This year, Prisma increased its stake in Dommo to more than 50%. Through its 100% owned portfolio company, Origem Energia SA, Prisma acquired Polo Alagoas from Petroleo Brasileiro SA in a $300 million transaction in February. 

Hallack, Canhoto and Mendes got to know each while working for BTG. Hallack headed private equity at the bank, while Canhoto was a partner at the special-situations desk. Mendes was a lawyer at his own firm and worked closely with BTG. Other Prisma partners include Rodrigo Pavan, Rafael Maradei, Edgard Erasmi and Thiago Guimaraes, all former BTG partners or executives, and Gabriel Affonso Ferreira, formerly at alternative-asset manager Gavea Investimentos.

Prisma was founded in 2017 and has $2.3 billion in assets under management. About 70% comes from institutional offshore investors, including endowments, foundations and sovereign-wealth funds, and 30% is from Brazilian family offices.

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