UBS Group is reportedly in talks to purchase a controlling stake in Brazilian asset manager BB DTVM, which manages $217bn (BRL1.2trn) in AUM.

In addition to UBS, Franklin Templeton and BlackRock are also in the fray, Bloomberg reported citing people familiar with the development.

The discussions for the stake acquisition are in the preliminary stage and no agreement has been reached, the report added.

The sale procedures will probably face a delay as BB DTVM’s parent company Banco do Brasil is currently in the process of replacing its CEO.

The undisclosed sources also revealed that Rothschild & Co. is advising Banco do Brasil on a potential deal and the company is considering several different deal structures.

Andre Brandao, who prioritised the sale, quit last week after clashing with Brazilian president Jair Bolsonaro over austerity measures.

He is expected to be replaced by Fausto de Andrade Ribeiro, who’s been working at Banco do Brasil for over two decades.

UBS, Franklin Templeton and BlackRock, Banco do Brasil, and Rothschild & Co declined to comment on the report.

The sale process

The state-controlled Brazilian lender initiated the sale process of BB DTVM in 2019, under its ex-CEO Rubem Novaes.

The process came to a halt last February as the lender considered the bids delivered below the par, another source divulged.

Later, Novaes quit the bank and was replaced by Andre Brandao.

In January this year, reports emerged about Banco do Brasil is recommencing the sale process of BB DTVM.

Offloading stake in its asset management unit is part of the company’s effort to scale up its profitability levels similar to that of other non-state-owned banks in Brazil.

The plan includes selling assets, moving away from riskier loans and closing of some 200 branches, that is expected to lead to over 5,000 job cuts.

UBS and Banco do Brasil

In 2019, UBS and Banco do Brasil inked a binding agreement to set up a new investment bank in South America.

Both parties also tied up for a brokerage business in Brazil and a commercial agreement with Banco Patagonia in Argentina.

In 2015, UBS Global Asset Management and BB DTVM joined forces to offer Brazilian institutional investors access to global sustainable equities.