Why a New Wave of Family Offices Are Emerging in Brazil
Sept 26. 2019 While the Amazon rainforest wildfires and the political drama from newly elected president Jair Bolsonaro’s administration have captured the global spotlight this year, Brazil’s underlying economy seems to be quietly regaining steam. The pace of wealth creation and family office launches has picked up in the last year, in a sign that Latin America’s biggest growth engine is back on track.
The Global Wealth Report, published by the Boston Consulting Group in 2018, showed that Brazil’s ultra-wealthy individuals (those with over US$20 million in assets) had the same level of investable assets collectively ($400 billion) as those in Switzerland. In fact, the report estimated that the assets of Brazil’s wealthiest investors is expanding at more than twice the rate of it Swiss counterparts (11% versus 5%).
Brazil’s investable assets now account for a whopping 40.7% of the total across Latin America. Ultra-wealthy Brazilians hold twice the assets of their Mexican counterparts, the second largest group in the region.
This rapid expansion of wealth creation could be attributed to falling interest rates and recently relaxed regulations, which are helping to attract more foreign investments into Brazil than ever before, according to Citigroup. Citi’s optimistic outlook for Brazil’s economy seems to be shared by Deutsche Bank Wealth Management, which launched a new unit focused on Brazilian family offices earlier this year.
Similarly, Swiss banking giant UBS acquired a majority stake in Consenso Investimentos, Brazil’s largest independent multi-family office, in 2017. It is now the largest player in Brazil’s wealth management industry.
The second largest player is Sao Paulo-based GPS Investimentos, which has accumulated over US$8 billion in assets under management. Partners at the firm told Citywire Americas that 2018 had been a stellar year for wealth creation after an extended period of economic malaise. “For three to four years we hadn’t seen any new wealth being created, there weren’t any IPOs, no companies were being bought by strategic investors. Suddenly over the past 12 months we have seen this market warm up and we are now seeing the creation of new wealth,” they said.