BTG Said to Withdraw From Auction for JPMorgan Commodities Unit

Jan 17, 2014 11:46 am ET

Jan. 16 (Bloomberg) -- Grupo BTG Pactual, the Brazilian investment bank founded by billionaire Andre Esteves, ended its pursuit of JPMorgan Chase & Co.’s physical commodities business, two people with knowledge of the matter said.

Bidding for the unit has advanced to three firms, including Blackstone Group LP, and New York-based JPMorgan may pick a buyer within a few weeks, said one of the people, who requested anonymity because the process is private. BTG declined to comment, according to an official who asked not to be named in keeping with company policy. Spokesmen for Blackstone and JPMorgan said their firms had no comment.

JPMorgan, the biggest U.S. bank by assets, has sought $3.3 billion for a division that produces $750 million in annual income before compensation costs, a person with direct knowledge of the sale process said in October. The biggest U.S. lender by assets decided to auction the business as regulators review a decade-old ruling allowing deposit-taking banks to trade physical commodities.

BTG withdrew from the bidding in part because of the extra capital Brazilian regulators would require the Sao Paulo-based firm to hold against physical commodities, one of the people said. BTG plans to keep growing the business on its own to offer hedging, credit and trading services while limiting commodities ownership, the person said.

--With assistance from Devin Banerjee in New York and Andy Hoffman in Geneva. Editors: Peter Eichenbaum, Rick Green