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Thursday, March 17, 2011

Batista’s $80 Billion Wealth Target Turns to Colombia IPOs - Businessweek



Batista's $80 Billion Wealth Target Turns to Colombia IPOs

March 15, 2011, 11:18 AM EDT

By Juan Pablo Spinetto and Fabiola Moura
(Updates shares in eighth, thirteenth paragraphs.)
March 15 (Bloomberg) -- Billionaire Eike Batista plans initial public offerings for two Colombian companies a year after the flop of his OSX Brasil SA sale, as he seeks to more than double his wealth in the next four years to $80 billion.
Batista, 54, said in an interview he will sell shares in his gold mining unit in Bogota, London and Sao Paulo in the next year. The issuance will show the exploration company is worth at least three times its current value, Batista said. He also aims to raise $1.5 billion by listing his Colombian coal mining unit.
The son of a former Brazilian mines minister who bought his first gold field at age 24, Batista is seeking a return to equity markets after OSX tumbled as much as 50 percent since being listed in March 2010, the biggest failure in the nation's IPO market since 2008. Batista said he isn't concerned about the decline and predicted by 2015 his wealth will surpass that of Mexico's Carlos Slim, who Forbes said last week is the world's richest person with estimated assets of $74 billion. Batista is the world's eighth-richest person with $30 billion, Forbes says.
"I've been telling him he should clean up his right-side mirror and his left and on the top, because I am going to pass through on one of these sides," Batista said yesterday in an interview at Bloomberg's New York headquarters. "Mr. Slim is going to be number two, three, I don't know."
Batista took control of Ventana Gold Corp., a Vancouver- based exploration company with properties in Colombia, through his AUX venture this month, valuing Ventana at C$1.54 billion ($1.58 billion). He will invest about $100 million in Ventana and may consider buying more assets before the IPO of AUX. Ventana will be worth at least $4.5 billion when the assets are listed, Batista said yesterday.
EBX Listing
EBX Group Ltd., which controls Batista's publicly traded companies, is "never going public," Batista said. He had proposed an IPO for the Rio de Janeiro-based holding company last year.
"Forget the IPO of EBX, it doesn't make any sense," he said.
Brazil's benchmark stock index, the Bovespa, is down 4.1 percent this year and Batista's mining company, MMX Mineracao & Metalicos SA, has tumbled 15 percent since the beginning of the year. MMX fell 0.3 percent to 9.57 reais at 11:10 a.m. New York time in Sao Paulo trading, while the Bovespa was down 1 percent. At least two of this year's four Brazilian IPOs were priced below initial estimates.
"Sounds like an ambitious plan in what could be tough markets, but he's done similar before and the assets sound attractive," Nick Robinson, who manages $4 billion in Brazilian stocks at Aberdeen Asset Management in Sao Paulo and doesn't own shares of Batista's companies, said in an e-mail.
'Bonanza Assets'
Batista, who adds the letter X to all of his companies' names to represent multiplication of wealth, said he doesn't manage with short-term goals in mind. Instead, decisions are made with horizons of three to five years, he said.
"I don't fall in love with assets, I fall in love with idiot-proof assets," Batista said. "These are bonanza assets."
MMX is the only one of Batista's five publicly traded companies that has reached an operational stage. The miner recovered 5.6 million tons of iron ore in the first three quarters of 2010.
Production Outlook
OGX Petroleo & Gas Participacoes SA, an energy company, will start pumping oil in August, Batista said. LLX Logistica SA, Batista's logistics business, will open its Porto Acu in the third quarter next year, and OSX received a preliminary environmental license from the government of Rio de Janeiro this month to build the biggest shipyard in the Americas. OGX fell 1.4 percent today to 18.78 reais, while LLX gained 2.2 percent to 4.71 reais. OSX advanced 0.2 percent to 525 reais.
"The majority of his projects have yet to deliver positive net income," said Ed Kuczma, an emerging markets analyst at Van Eck Associates Corp. in New York. "Not all investors are willing to invest in such long-term, speculative projects due to the high execution risk involved."
Ventana owns La Bodega, a deposit 400 kilometers (248 miles) northeast of Bogota that contains an estimated 3.5 million ounces of gold, 19.2 million ounces of silver and 84.6 million ounces of copper, according to the company's website. The project has the potential to produce 301,000 ounces of gold a year for its first six years of production, Ventana said before Batista took control of the company.
Batista said last month that he plans to also take CCX, his Colombian coal mining unit, public.
Slim in Colombia
"Now I have two new companies that are going to go public in a year from now," he said.
Slim, whose assets include America Movil SAB, the biggest mobile-phone company in the Americas with 225 million subscribers, said last month in an interview with Bloomberg News that he is seeking to boost oil investments in Colombia because of the country's open policies on exploration.
Slim's Grupo Carso SAB agreed Feb. 23 to acquire a 70 percent stake in Geoprocesados SA's Tabasco Oil Co., gaining access to Colombia as the country seeks to boost crude and natural-gas output.
"He is following me," Batista said. "Healthy competition."
Arturo Elias, a spokesman for 71-year-old Slim in Mexico City, declined to comment on Batista's remarks.
Better Security
Investors are being drawn to Colombia because of improved security following a government crackdown on drug-funded rebels. Military offenses reduced attacks on pipelines, roadways and bridges to 76 in 2009 from more than 800 in 2002, according to government figures.
Batista said he also aims to list all five of his Sao Paulo-traded companies in London to help lure more international investors.
"When people say that my OSX structure was not a success, I say, listen, I invested $100 million, not even that, and we raised $1.4 billion in the IPO," Batista said. "Voila."
He used the French word -- which expresses satisfaction when something is accomplished or revealed -- at least eight times during the interview.
--With assistance from Margaret Brennan in New York. Editors: Brendan Walsh, Laura Zelenko
To contact the reporters on this story: Juan Pablo Spinetto in New York at jspinetto@bloomberg.net; Fabiola Moura in New York at fdemoura@bloomberg.net
To contact the editors responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net; Francisco Marcelino at mdeoliveira@bloomberg.net


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