Goldman Sachs Plans More Latin America Hirings After a Record Year

(Bloomberg) -- Goldman Sachs Group Inc. plans to keep expanding in Latin America after a record year in the region, hiring in areas including equity research, sales, trading and derivatives.

“We are in growth mode in the region,” Aasem Khalil, co-head of Latin America for the New York-based firm, said in an interview. “We want to continue to invest in equity capital markets in particular.”

The firm's revenue in Latin America was boosted by a record year in asset management, global markets and investment banking, Khalil said. Goldman also sold stakes on public markets in firms including Oncoclinicas do Brasil Servicos Medicos SA. It started operating its stock broker-dealer in Mexico in June, and hired 40 engineers in Brazil to support the Americas emerging-markets and equity-derivatives businesses.

During the past five years, revenue in the region is up almost 60% compared with the previous five years.

“We are actively building a bigger engineering hub in Brazil, not only to service our local clients, but also global-markets clients outside of the region,” said Ricardo Mora, who co-heads Latin America along with Khalil.

Goldman underwrote some of Latin America's biggest recent equity offerings in the U.S., including fintech Nu Holdings SA's $2.53 billion initial public offering. But the bank hasn't been as active in coordinating Brazil listings, where local firms such as Itau Unibanco Holding SA and Banco BTG Pactual SA rose in the deal rankings. Goldman's strategy to gain market there is to hire more coverage bankers and executives for equity capital markets, Khalil said.

“We think it's a big area of opportunity for us,” he said. “In Latin America, we have the same obsession about league-table rankings, although our aspirations are slightly different: We are really looking to be the best international bank in the region, and not trying to compete with some of the biggest local banks on the ground.”

Latin American firms issued $33.5 billion of stock in 2021, including initial public offerings and secondary share sales, an increase of 2.6% over 2020, according to data compiled by Bloomberg. Of the 95 deals, 84 were from Brazilian companies, the data show. Goldman Sachs ranked sixth, up from 11th in 2020.

Fees surged 49% from investment-banking work such as merger-and-acquisition advising and equity and debt capital-markets underwriting, to $2.1 billion, according to the London-based research firm Dealogic.

While local Latin American banks have huge balance sheets, Goldman Sachs will continue to be “very strategic about how we lend money,” Khalil said.

Mora said the bank “used our global client footprint to finance the acquisition of commodity assets across the region with Goldman Sachs's committed capital,” without providing more details. He also cited examples such as financing to one of the bank's “larger global clients” to acquire Vale SA shares as the Brazilian development bank, BNDES, divested its holdings.

Goldman Sachs increased a credit line to $160 million to Mexican financial-technology firm Konfio Ltd. to support the startup in its bid to disrupt traditional lending practices in Latin America's second-largest economy. It also lent 400 million reais ($70.5 million) to MercadoLibre Inc. to finance small and midsize companies in Brazil, participated in a $125 million financing for the Colombian fintech Addi. At least four other companies have received more than $500 million in credit or equity deals with Goldman's participation, according to data compiled by Bloomberg.

With 500 employees based in Latin America in Sao Paulo, Santiago, Lima, Buenos Aires and Mexico City, Goldman Sachs was the fifth-biggest underwriter of global bonds from Latin American issuers in 2021, data compiled by Bloomberg show. Even without a local presence, the bank offers private-banking and wealth-management services to Latin American clients from south Florida and Geneva, Mora said.

Amid a global push to develop its transaction-banking business, which provides services such as liquidity management, virtual accounts and payments for companies, Goldman is offering the service to Latin American clients. The bank also continues to focus on “electronification of Latin America in market-making activities” to increase services and reduce transaction costs for quantitative funds and local investors.

Prospects of slower economic growth in the region this year, as well as more volatile markets in Brazil due to the October presidential election, won't be a constraint, Khalil said.