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March 2, 2010

BRAZIL: Investment bank takes Mitsubishi assembler stake

Investment bank BTG Pactual has agreed to buy a minority stake in Mitsubishi Motors do Brasil, betting on a boom in Brazil's automobile market.

Investment bank BTG Pactual has agreed to buy a minority stake in Mitsubishi Motors do Brasil, betting on a boom in Brazil’s automobile market.

Mitsubishi Motors do Brasil, or MMCB, plans to unveil in about 15 days an investment plan to expand output in the country, Eduardo de Souza Ramos, partner and founder of the automaker, told Reuters . The expansion had already been planned and would not use funds from the BTG Pactual stake purchase.

The investment in MMCB, which imports, produces and distributes Mitsubishi Motors vehicles in the country, is the latest bet by BTG Pactual on strong growth in Brazil’s consumer market. The bank has bought stakes in drugstore chain Farmais, garage operator Estapar and Derivados do Brasil, which owns a chain of fuel service stations, the report said.

The Brazilian bank declined to disclose terms of the transaction, which was carried out by its merchant banking unit. The unit, led by banker Carlos Fonseca, invests money from BTG Pactual partners in companies seeking long-term returns.

“We see in Mitsubishi the best growth platform for the Brazilian automobile sector,” Fonseca told analysts in a conference call.

Latin America’s largest economy is forecast to grow nearly 6 percent in 2010, according to central bank estimates, fueled by jump in credit to consumers and businesses, low unemployment and rising household income.

BTG Pactual said the number of vehicles per capita in Brazil, 179 per 1,000 people as compared with 478 per 1,000 in the US, makes the market ripe for growth. Automobile sales in the country jumped 11.4% in 2009 from the previous year to a record 3.14m units, in part because of a series of government tax breaks.

MMCB said it had annual sales of about BRA4bn (US$2.22bn) and a CKD assembly plant in central Brazil with output capacity of 48,000 vehicles a year.

Small MMC SUV; big revamp

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