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Brazilian asset managers Modal, Flag decide to merge

Flag Asset Management Gestora de Recursos and Modal Asset Management Ltda. have decided to merge their operations to create a new company called Novus Capital, Valor Econômico reported.

The new institution, in which Banco Modal SA will hold a minority stake, will employ 20 professionals and manage 1.60 Brazilian reais in assets.

According to the report, the deal does not include a cash component and will be carried out through the exchange of shares. Banco Modal will hold less than a third of the merged entity.

Luiz Eduardo Portella, chief economist at Modal, expects the new company to take advantage of a low interest rate environment and expand its equity to 2 billion reais over the coming months and to between 5.00 billion and 10.00 billion reais in three years, Valor reported.

As of Sept. 6, US$1 was equivalent to 4.15 Brazilian reais.