‘We don’t see any institutional rupture happening’, says Alfredo Setubal

For the president of Itaúsa, Alfredo Setubal, the political uncertainties caused by the elections in the country do not generate major concerns for the company, given the long-term perspective with which it works for investments in the portfolio.

“We don’t see any institutional rupture happening”, said Setubal this Tuesday (16), in a conversation with journalists to comment on the holding company’s results in the second quarter.

With relevant stakes in Itaú, Alpargatas, Dexco (formerly Duratex) and CCR, among others, Itaúsa reported a net income of R$3 billion from April to June, an amount 5.5% higher than in the same quarter last year.

Setubal also said that the company is already used to moments of marked volatility in the country’s politics and economy, but that the vision for the development of the portfolio business is focused on the long term.

“There may be changes here and there, less concessions, more government, it will depend on who wins the election, but we look at long horizons,” said the president of Itaúsa.

Asked if he considered signing the manifestos in defense of democracy, he declined to comment. President of Itaú’s board of directors, Roberto Setubal was one of the signatories of the manifesto in defense of democracy organized by the USP Law School and by entities and representatives of civil society.

During the conversation this Tuesday, the president of Itaúsa also stated that he had even considered investing in Eletrobras, within the scope of the electric power privatization process, but that he chose not to go ahead due to the indebtedness that the deal would entail for the holding’s balance sheet. .

According to Setubal, Itaúsa would have to pay around R$5 billion to participate in the Eletrobras share offering.

The executive stated that the decision not to invest in the privatization offer was not due to the quality of the company. “Whoever acquired Eletrobras shares will have a very positive return,” he said.

He added, however, that, given the size of the necessary investment, “no matter how good the prospect of return, it would not be appropriate and prudent to make the investment”.

Setubal sees unjustified discount on Itaúsa shares on the stock exchange

Regarding the withdrawal of the investment that Itaúsa has in XP, Setubal stated that the intention is to make the sales in the same period in which Itaúsa’s debts are amortized, but that there is no defined schedule with a date for the new sales of shares.

In July, seven million XP shares were sold, for approximately R$665 million, reducing Itaúsa’s stake to 10.31% of XP’s total capital. With the transaction, Itaúsa expects a positive impact on third quarter results of approximately R$300 million.

Setubal stated that he considers XP a good quality company, but that it is not a strategic investment for Itaúsa’s plans, and that the focus on the financial sector will be concentrated on Itaú.

He also said that he considers the discount level at which Itaúsa’s shares are traded on the Stock Exchange to be exaggerated compared to Itaú’s, currently around 24%.

The executive believes that the discount of this magnitude is mainly due to the reduction in the payment of dividends to shareholders in recent years —​​in the interval from 2020 to the first half of 2022, the remuneration via distribution of dividends to shareholders was 25%, compared to to Itaúsa’s profit in the period, against an average of 83% between 2017 and 2019.

The drop in the distribution of dividends is due to the moment in which the companies in the holding’s portfolio are, with a greater volume of investments to face the business expansion plans, he says. He estimates that, over a medium-term horizon, around three years, dividend payments should return to the historical average distributed by Itaúsa to its shareholders, between 40% and 50% of profit.

“The most correct discount [em relação às ações do Itaú] would be something around 15%”, he said. In the accumulated of 2022, until August 15th, Itaúsa’s shares rose about 5.8%, against the gains of 27.8% in Itaú’s shares. valuing our portfolio”, said the president of Itaúsa.