Grupo BTG Pactual SA (BBTG11.SA) could book a net gain of about 3.5 billion reais ($1.15 billion) when the recent sale of a stake in Brazilian hospital chain Rede D'Or São Luiz SA is completed, Chief Executive Officer André Esteves said on Thursday.

Esteves told investors during a conference call the estimate was based on Rede D'Or's higher equity value after the April 27 sale of about 8 percent of the hospital company to private-equity firm Carlyle Group LP (CG.O) valued the hospital chain at more than 20 billion reais.

The transaction is expected to be finalized by the third quarter. Esteves said BTG Pactual plans to book the gain based on how much the equity value of Rede D'Or increased since BTG first invested in the chain.

A source with direct knowledge of the Carlyle deal told Reuters in April that BTG Pactual bought about 600 million reais worth of convertible bonds from Rede D'Or in 2010.

According to the source, the Carlyle transaction valued BTG Pactual's stake at about 4.95 billion reais, which discounted from the initial investment and taxes, would be about 3.5 billion reais.

Carlyle acquired its stake through a capital increase after controlling shareholder and Chairman Jorge Moll and BTG Pactual agreed to dilute their own holdings. Under the terms of that deal, BTG Pactual's stake in Rede D'Or fell to 23.5 percent from 26.5 percent, with Moll and his family controlling about 68.5 percent.

Further divestitures of São Paulo-based BTG Pactual's entire stake in Rede D'Or could take place in coming months, Esteves said without elaborating during the conference call.

The transaction underscores Esteves' efforts to shift BTG Pactual's revenue mix toward money management and trim principal investments, or income generated by assets in real estate, hedge funds and private equity bought with the bank's own money.

"Banking activities will grow faster than merchant banking" in coming quarters, he said.

First-quarter profit at BTG Pactual beat expectations slightly after a surge in income from sales, trading and corporate lending offset higher taxes. The company earned 854 million reais last quarter, compared with an average estimate of 847 million reais in a Reuters poll.