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Tue 8 Nov 2016 10:09 AM

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BTG Pactual to exit $1.3bn venture with Abu Dhabi, sources say

ADIC likely to hold onto 50% stake in global reinsurer Ariel Re, according to a report

BTG Pactual to exit $1.3bn venture with Abu Dhabi, sources say
Skyscrapers stand on the skyline viewed from the Central Market in Abu Dhabi, United Arab Emirates, on Wednesday, Jan. 11, 2012. Abu Dhabi, the oil-rich sheikhdom that spent 36 billion Dirhams ($9.8 billion) bailing out its biggest developer in 2011, will probably reach for its checkbook again as property companies in the United Arab Emirates face a stalled market and deadlines to repay debt. (Credit: Bloomberg News)

Grupo BTG Pactual SA plans to exit a $1.3 billion venture with the Abu Dhabi government's investment arm as the Brazilian investment bank nears the sale of a 50 percent stake in a reinsurance firm that the venture controls, three people with knowledge of the matter said.

Talks to sell BTG Pactual's stake in Ariel Re are at an advanced stage, the first source said, without elaborating. Once BTG Pactual exits Ariel Re, ending the venture would be a natural next step since it was intended to be a global insurance operation, the same person added.

None of the sources elaborated on how much BTG Pactual would fetch from the sale of the Ariel RE stake or who are the potential buyers. The venture was formed in January 2014 through a combination of equity, cash and long-term debt, two of the sources said.

An announcement of BTG Pactual's stake sale in Ariel Re could come as early as this week, the second source said. According to a third person, the Abu Dhabi Investment Council, known as ADIC, is likely to hold onto its 50 percent stake in the venture.

BTG Pactual bought Ariel Re from Global Atlantic Financial Group in July 2014, with ADIC taking the remaining 50 percent stake in the reinsurer a month later.

Both São Paulo-based BTG Pactual and ADIC declined to comment. They formed the venture in January 2014.

The decision underscores efforts by BTG Pactual to focus on core activities, reduce assets and put the brakes on a global expansion since the November 2015 arrest of billionaire founder André Esteves.

Esteves, who steered the bank through an aggressive global expansion, was arrested for allegedly colluding with a senator to obstruct an ongoing probe. He was later released, but a subsequent surge in client withdrawals forced his successors to sell one-fourth of assets, cut 20 percent of the bank's Brazil-based staff and end risky but profitable trading positions.

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