(Adds redemption deadline extened to Jan. 29, details on assets)
By Steve Slater
LONDON, Dec 14 (Reuters) - Embattled Brazilian bank Grupo BTG Pactual SA is evaluating options for its flagship global emerging markets and macro (GEMM) fund following the arrest of the bank's founder, a person familiar with the matter said on Monday.
BTG Pactual is writing to GEMM investors and will extend a deadline for redemption notices by six weeks to Jan. 29 "to give all investors adequate time to understand the strategic options being evaluated", the source said.
The deadline for March 1 redemptions had been previously set as Dec. 16.
A sale or management buy-out are among the options being considered for the fund, industry sources said.
Sao Paulo-based BTG Pactual is considering selling assets after its billionaire founder André Esteves was arrested last month in connection with a corruption investigation in Brazil.
BTG Pactual's global hedge funds had 26.6 billion Brazilian reais ($6.9 billion) under management at the end of September, according to a recent presentation by the bank.
GEMM is its biggest hedge fund and had assets under management of $4.1 billion at the end of October, the source said.
BTG Pactual will tell investors GEMM "has significantly reduced its risk exposure" and will continue to do so, the source said.
The hedge funds are based outside Brazil and run from London, New York and Hong Kong.
GEMM is focused on emerging markets and many of its investment team are partners at the bank. (http://www.reuters.com/article/us-btgpactual-hedgefunds-idUSBRE90U0ZH20130131#Vs4MCA72gHBTJ2yL.97)
The partners are investors in the funds and clients invest alongside them. The bank's website says the hedge funds' investor base is made up of high net worth individuals and institutional investors, such as global pension funds.
BTG Pactual is looking at selling other assets, including its Swiss private banking arm BSI, which it bought earlier this year.
(Editing by Louise Heavens and David Clarke)