JPMorgan buys majority stake in Brazil's Gavea

JPMorgan Chase & Co said it acquired a majority stake in Brazilian hedge fund and private equity firm Gavea Investimentos, increasing its presence in one of the world's fastest growing economies.

The second-largest US lender by assets said in a statement it made the purchase through its Highbridge Capital Management hedge fund firm.

The New York-based bank did not disclose the value and terms of the transaction. Local media in Brazil said the bank would pay about $270 million for a 55 per cent stake and has an option to buy the remaining 45 per cent in the next five years.

In a memo sent to employees late on Tuesday by asset management chief Mary Erdoes, JPMorgan said Gavea manages $6 billion in assets.

"Gavea will provide Highbridge with greater macroeconomic insight and direct exposure to investing in Brazil, which will be a powerful addition to our investment capabilities," Glenn Dubin, chief executive officer of Highbridge, in a statement.

Arminio Fraga, a former Brazil central bank president and founder of Gavea, and six other Gavea executives will remain at the firm, the statement said.

Both Arminio Fraga and Luiz Fraga, Gavea's co-founder and co-chief investment officer of private equity business, will join Highbridge's executive committee.

Brazil's economy, the largest in Latin America, is forecast to grow 7.5 per cent this year, making it a focus for major private equity and asset management companies looking to benefit from investment flows to stocks and companies.

Gavea was founded by Arminio Fraga in 2003 shortly after he left his job as president of the central bank. Fraga is also a member of JPMorgan's international board.

Brasil's Veja magazine first reported the JPMorgan deal in its online edition on Monday, followed by the Financial Times on Tuesday, which said JPMorgan would hold 55 per cent of Gavea.