Successful foreign involvement in Brazilian investment banking demands some sort of venture with one of the local firms that dominate the market. Banco Pactual is among the most successful of these and Goldman Sachs seems to have recognized this.
There were 11 equity deals in Brazil in 2004. Each of them had at least one Brazilian bookrunner, and a couple had no foreign bank involvement at all. Brazil's Banco Pactual played a part in seven of the 11 deals; the best performance by a foreign bank was that of UBS, which was part of three deals.
Brazil's banking system is dominated by domestic institutions: something that is unusual, if not unique, in Latin America. What really sets Brazil apart is the fact that its dominant institutions include investment banks. Foreigners have a habit of buying them – as Euromoney went to press, an announcement was expected from Goldman Sachs about some kind of merger or joint venture with Banco Pactual. But so far, at least, no foreign bank seems to have really cracked the nut that is investment banking in Brazil.
Risk appetite
Brazil is a huge country, absolutely critical to the success of any foreign bank's Latin American strategy.