The giants of Wall Street – Citigroup and JP Morgan – are
neck-and-neck in terms of their transactions in Brazil. Last year,
JP Morgan was ahead by a whisker. Both banks can be expected to
pitch aggressively for corporate finance deals in Brazil, a crucial
market both for its size and for the prestige that comes from
handling large and complex transactions for international groups.
In January, JP Morgan handled two banking deals – the sales of
Banco Mercantil de São Paulo and Banco Ford to Bradesco.

Citi and JP Morgan were ahead of the old-line investment banks like
Goldman Sachs, Morgan Stanley and Merrill Lynch. The European
houses like CSFB, UBS and Deutsche Bank are working hard but have
not made significant inroads into the Brazilian M&A market.
These banks are all competing for big-ticket transactions and have
left a clutch of Brazilian boutiques to scramble over smaller,
private deals.

For instance, Banco Pactual advised banker Pedro Conde on the sale
to the company’s management of his 60% stake in Cotia Trading, a
logistics firm, for about $30 million in January. Banco Fator has a
small but active M&A department, which claims to have done $15
billion in transactions over the last four years. As one of the few
Brazilian investment banks left, Fator usually gets included as a
government advisor in privatizations, such as the December 2000
sale of Banespa for $3.6 billion.

Fator trades on the close relationships it has built up over the
years with medium-sized companies, as well as its considerable
financial sophistication. However, it has rarely handled a deal in
which it has had to compete with the big New York or European
banks.

A few new boutiques are springing up in the hope of winning a slice
of the growing second-tier corporate finance business. In January,
Luiz César Fernandes, a celebrated Rio de Janeiro investment
banker, and Jório Dauster, the former president of CVRD, set up a
boutique to be called Invixx to focus on private equity investment,
M&A advisory work and venture capital funds for technology
companies.