Snapshot: The 3 global funds cleared to invest in Brazilian telco Oi

Brazil’s antitrust regulator Cade cleared equity investments of three global funds in troubled telco Oi, a move that is part of the operator’s second judicial reorganization process, a type of bankruptcy protection.

Through the capitalization of part of the debt they hold in the telco, the companies will have more than 30% of Oi's total share capital.

Oi will therefore have major global shareholders in its shareholder structure. Two of them will have more than 5% of Oi and the third will have at least 20%.

The investors are injecting US$505mn into Oi and, in exchange, will have part of the debt converted into new debt and equity.

The three funds are managed by Pacific Investment Management Company (Pimco), SC Lowy Primary Investments and Ashmore Investment Management.

California-based Pimco is one of the largest global investment managers, handling more than US$2tn in assets for central banks, sovereign wealth funds and pension funds. Its stake in Oi will surpass 20% following Cade's approval.

The company belongs to Germany's insurance and financial services giant Allianz Group.

Pimco has participation in satellite company Intelsat, which is currently in the process of being sold to SES.

In Brazil, Intelsat provides satellite communications services and holds authorizations from regulator Anatel to operate 11 satellites and to provide telecommunications services of public interest.

Intelsat’s share of the satellite capacity segment in Brazil is less than 10%, corresponding to 14.7GHz, considering that the total satellite capacity of the Brazilian market is 151.5GHz.

According to Anatel's database, there are 52 satellites in operation in Brazil, owned by 35 operators, 11 of which are operated by Intelsat.

Oi, for its part, also provides satellite-based services for pay TV and broadband, among others, although it is divesting these operations as part of its restructuring process.

Pimco argued that even its temporary (prior to Intelsat's sale closing) overlap with Oi would not be able to dominate the satellite capacity market in Brazil and that Intelsat competes with other significant groups in the provision of wholesale communication services in the country.

SC LOWY AND ASHMORE

SC Lowy is part of the Hong Kong-based SC Lowy Group.

It is a global private banking and asset management group focused on credit markets, with presence in Asia, the Middle East, North America and Europe.

The firm was founded and is led by Michel Lowy and Soo Cheon Lee.

Lowy reports US$1.6bn in assets under management and US$4.8bn capital deployed since its creation in 2009. The group has nine offices around the world, none of which is in Latin America.

Unlike Pimco/Intelsat, Lowy has no telecoms investments in Brazil or Latin America.

UK-based Ashmore, for its part, was founded in 1992 as part of the Australia and New Zealand Banking Group, becoming independent in 1999.

It currently manages US$49.5bn (as of June) across pooled funds, segregated accounts and structured products and claims to be a “leading dedicated specialist in emerging markets asset management.”