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Vinci Partners: opportunities in financial services in Brazil

Brazil is a large and attractive market for financial services, highlights Vinci Partners Investments, a Brazilian investment fund company founded in 2009 by former BTG Pactual partners.

The country has the sixth largest population and the ninth largest economy in the world, with 211 million people and a GDP of $1.5 trillion as of 2020, according to the World Bank.

Data published by the Central Bank indicates that real GDP expanded 1.3% during 2017, 1.8% during 2018, 1.4% during 2019 and decreased 4.1% during 2020.

Then, in 2021, Brazil posted a strong recovery with GDP growth of 4.6% and has reversed all monetary and fiscal stimuli introduced in response to the Covid-19 pandemic.

Looking ahead, Vinci Partners projects that the path for the country continues to be a constructive macroeconomic environment, supported by a reduction in the inflation rate, the stabilization of interest rates in real terms and a recovery in confidence indicators for consumers and businesses.

Having reversed all fiscal and monetary stimulus related to Covid-19 in 2021, Vinci Partners believes that the combination of economic growth and a stabilization of interest rates will create increasingly favorable tailwinds for the asset management industry in the coming years. next years.

Vinci Partners

The Brazilian asset management industry has been highly inefficient for decades due to high interest rates, which limit the incentives for product development by holders and lead to a high concentration of investments in the banking sector, which still represents the majority of institutional and retail investments in Brazil.

Vinci Partners believes that this has created several significant market challenges that create opportunities for disruption:

  • Highly concentrated market.
  • Bureaucratic infrastructures with many assets.
  • Limited selection of financial products.
  • Promotion of inefficient financial products.
  • High costs and differentials.
  • Bad customer service.

Trends

Vinci Partners explained that its market will benefit from several trends that will help generate attractive tailwinds, including:

  • A growing demand for financial products.
  • Disintermediation of the incumbent banks.
  • The growing demand for financial education and information.
  • Favorable and highly aligned regulatory initiatives.

 

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