Banco BTG Pactual SA's planned secondary public offering and its transfer of a majority of its held stake in Switzerland's EFG International AG to BTG Pactual Holding S.A. is credit positive, as it will support the company's business, Moody's said.
Moody's expects the stock offering to raise $500 million to $750 million and increase its free float to at least 21% of total shares traded in the market from the current 18.3%. This could boost the liquidity of its shares and enable it to apply for a corporate governance level 2 listing, as defined by exchange on the B3 stock exchange.
The rating agency also believes that the EFG deal, upon completion, will enhance Banco BTG's capital structure and let the bank use the proceeds to expand its lending activities and its digital platform BTG Digital. The divestment would reduce BTG's equity stake in EFG to approximately 5% from 30%.
"Shrinking the EFGI stake will reduce the volatility in BTG's capitalization ratios caused by share price fluctuation and is credit positive," Moody's noted.
The bank plans to accelerate its growth in retail banking with the launch of a digital platform to offer services to medium-sized enterprises, by combining its investment, credit, checking account and insurance operations in one platform, the rating agency noted.
"Although the digital banking business has not yet contributed materially to earnings, BTG in first-quarter 2019 reported strong revenue from its investment banking unit, driven by both debt issuances and equities, and 33% growth in its wealth management division over the past 12 months, aided by its online broker channel."