JP Morgan in $800m deal to buy Gavea

Steve Dinneen
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JP MORGAN has agreed to buy Brazilian hedge fund and private equity firm Gavea for an undisclosed sum.

The second largest US lender by assets will acquire a 55 per cent stake in the company, with an option to purchase the remainder in the next five years.

The deal is expected to value the Brazilian firm at around $800m (£505m). Gavea manages about $6bn in assets.

Under the terms of the agreement, Gavea’s founder Arminio Fraga will be required to stay at the helm of the Rio de Janeiro-based investment firm for at least another five years, according to sources close to the deal.

Fraga is also a member of JP Morgan’s international board and is well known in Brazil as a former head of the central bank, where he held the position between 1999 and 2002.

JP Morgan declined to comment last night when contacted by City A.M.

The deal will increase JP Morgan’s exposure to the rapidly developing Brazilian market and fits well with the bank’s plans to grow inorganically outside the US.

It is understood the talks have been running since early this year, when the purchase of a minority stake in Gavea was considered.

Under the terms of the original agreement, JP Morgan would carry out the acquisition of a part of Gavea through Highbridge Capital Management, a hedge fund company that manages alternative investments for the New York-based bank.

JP Morgan bought control of Highbridge, which manages about $21bn of assets, in 2004.