Brazil’s largest private lender Itau Unibanco Holding SA has agreed to acquire control of Avenue, a brokerage that provides Brazilians with access to foreign markets, it said.
Itau Unibanco will spend 493 million reais ($92 million) for 35% of Avenue, including a cash injection of 160 million reais and a secondary share purchase, it said in a securities filing.
Two years after the closing of the first tranche, it will purchase an additional 15.1% stake for an amount yet to be determined, reaching a controlling stake of 50.1%.
Itau will also be able to exercise a call option for the remaining equity interest held by Avenue shareholders five years after the closing of the first part of the deal, it added.
Formally known as Avenue Holding Cayman Ltd, the brokerage owns a U.S. digital securities broker and has over 229,000 active clients and 6.4 billion reais under custody, Itau said.
In a conference call with reporters, Itau director Carlos Constantini said the bank does not expect hurdles to approve the deal with regulators.
Operation and management will remain separate, the companies said. Avenue CEO and founder Roberto Lee does not expect any changes in the broker’s management.
“To some extent, the acquisition reminds us of the deal with XP back in 2017. But in the case of XP, Itau didn’t get regulatory approval to buy full control,” said BTG Pactual analyst Eduardo Rosman in a note to clients.
The analyst noted the transaction is small, equivalent to 0.6% of Itau’s market cap, but “the deal with Avenue shows Itau is in attack mode, which we like”.
The deal still requires approval from regulatory bodies.
