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Breakingviews: Brazillionaires

Monday, March 11, 2013 - 03:35

March 11 - Eike Batista turned to BTG Pactual's Andre Esteves for help last week. Beaten-down investors in Batista's companies liked the idea. Richard Beales and Breakingviews columnists wonder why.

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Fifty Brazilian affiliate says what he's Quetta I keep Batiste number 100 on the Forbes list and Andrei Estevez. About 329. I think. And investors seem to like the corporation. Chris what happened I key Batiste as well as both companies well. I think the -- -- has been in big trouble over the past year he has a very very complicated and hired six interlocking public companies. And a waste all of them have been doing shockingly badly. They all have very very big problems he's lost about 1028 billion dollars or -- for investors over the -- snow ice and that he really needs a lifetime. And obviously Estevez office a couple of things he did it in some ways he's the Goldman Sachs and Brazil. Islands the most respected investor thing is being premature if his name alone I think -- it is. So what do -- despite the 28 billion dollars of lost value on the day they announce this cooperation deals I've been clear exactly what they're doing. The value of the six listed stocks within the empire go up -- billion dollar -- Which you know -- some of the helix is well I mean look Estevez has has created a clear sort of track record heat you know he he. He basically soldiers. Invest and bank UBS bought it back and then floated for four times what he paid for -- there is the guild and to get a little legs as bank also reported results for the 25% return on equity. Which you know probably you have you I was at a -- cutting -- I think right exactly it's up. He's comes on the track where it's not surprising that the market kind of got very excited about the activities involved. May be providing a line of credit but what kinds of advice he's got though. But it has little real question has a little bit of flavor of I keep it sees this thing right deflated oh these companies kind of before they really doing anything in this is a little bit let me -- this arrangement will really tell me what it is. Haven't really started a thing yet. It's the same kind of thing -- that the real problem I think that I -- system needs a little more than financial engineering and wizardry and just forget seeing it. He has an immense talent to start up companies in persuading. Investors -- to buy them for a lot of money including and a Middle East and so we're both. Yes yes including at the Abu Dhabi sovereign wealth fund which has lost a colossal amounts under unfortunate since -- fifteen billion dollars for a I think I think the question is people are starting to wonder is he actually any good at running companies everyone knows he can set them -- I -- she -- and he's been getting three manages to throw a wrench that's right he's he's that. 55 of the six -- CEOs of its publicly listed company what it does us. Part of it isn't -- perfect and a lot of it obviously is some sort of operational problems this cut these companies or oil wars they're iron or companies that ship builders. And they're all intertwined they're all -- you know -- so. Does this clear operational problems there's a lot of cash burn but there's also macro issue here me. When he was kind of pushing in and really capitalize on where the markets were Brazil's growing it. 70% a year end list and now under -- 1% last year at forecasts and up to look at this year. I mean the real question is what is -- gonna do and that's what people want to know normally you see that kind of market value bomb. When a banker gets retained because you -- out and sell off businesses that are famous so it's hard that well is not much itself plus this is -- is empire it's hard to believe he's gonna. A solid B who would be silly to. You know we've raised the question of where's the capital come ready to put more money into the business so that it will probably. We'll leave it that will follow favorite Brazilian billion as a we'll have more breaking news tomorrow.

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Breakingviews: Brazillionaires

Monday, March 11, 2013 - 03:35