Oxstones Investment Club™Jorge Paulo Lemann lost his first job, as a financial columnist at Jornal do Brasil, after graduating from Harvard University in 1961. Then a brokerage he started almost failed during a Brazil stock rout.
“Right after that, his career just took off,” said Alberto Dines, 78, the former managing editor of the Rio de Janeiro-based newspaper. “If he had continued being a journalist, he was going to be a Joe Schmo.”
In three decades of deal-making, Lemann, 71, engineered the $52 billion takeover of Anheuser-Busch Cos., founded a firm that became Brazil’s largest investment bank and amassed $11.5 billion to become the nation’s second-richest man after EBX Group Ltd. owner Eike Batista, according to Forbes magazine. His latest transaction is a $3.3 billion takeover of Burger King Holdings Inc., the biggest restaurant acquisition in at least a decade.
The man behind the buyout of the No. 2 U.S. hamburger chain, with his partners at New York-based 3G Capital, is a former tennis champion who started his own investment bank at 32. Lemann declined to comment through his outside public relations firm in Sao Paulo.
“It takes the same effort to think small than to think big,” Brazilian magazine Epoca quoted Lemann as saying in an April 8, 2008 article. “But to think big frees you from the insignificant details.”
‘Spartan Style’
Former colleagues describe Lemann as a frugal executive who shuns publicity and prizes simplicity. “He always had a very Spartan style,” said Arminio Fraga, the former Brazilian central bank president who took his first job in finance at Lemann’s brokerage and securities firm, Banco de Investimentos Garantia SA, when he was 28. Lemann has a “very simple, objective view of things and of life in general,” he said.
Lemann and his partners at 3G, Brazilian billionaires Marcel Herrmann Telles and Carlos Alberto da Veiga Sicupira, agreed on Sept. 2 to acquire Miami-based Burger King for $24 a share, 46 percent more than the Aug. 31 close. The stock rose 4 cents to $23.84 at 9:50 a.m. in New York Stock Exchange trading. The shares had fallen 13 percent this year before the deal was announced.
3G is taking over a fast-food chain battered by falling profits and sales growth that has slowed for two straight years in the recession. The firm’s tender offer for Burger King shares began on Sept. 16 and expires on Oct. 14.
‘Simple Habits’
The transaction underscores Lemann’s strategy of investing in consumer companies. He and his partners own stakes in Anheuser-Busch InBev NV of Leuven, Belgium, the world’s biggest brewer, and Rio de Janeiro-based Lojas Americanas SA, Brazil’s largest discount retailer with 479 stores. It’s also a shareholder in Curitiba-based America Latina Logistica SA, Brazil’s No. 1 railroad operator.
Lemann has “very simple habits and is extremely disciplined,” traits likely learned on the tennis court, said Claudio Haddad, president of Ibmec business school in Sao Paulo and a former chief executive officer for Garantia.
“He was Brazilian champion five times, Rio de Janeiro champion about 20 times and veterans’ world champion three times,” said Haddad. “He doesn’t drink, goes to bed early, wakes up early, exercises every day.” Haddad, 64, said he has a “small investment” in a 3G fund, declining to disclose the amount.
No ‘Star’
“By the way I used to play, I realized it would be hard for me to be among the 10 best in the world,” Lemann said in the Epoca article. “So I decided to stop. I realized I would not be a star.”
Lemann can best be described as “Calvinist,” Haddad said in a telephone interview from Sao Paulo. His employees learned exactly what that meant after brewer InBev NV, which was controlled in part by Lemann and his partners, took over St. Louis-based Anheuser-Busch in 2008.
About 1,400 quickly lost their jobs and perks ranging from business-class flights and BlackBerrys to free cases of beer were eliminated, according to a person familiar with the business who said he wasn’t authorized to speak publicly. Even Brazilian-born CEO Carlos Brito was asked to fly economy class.
“They are not about showing off,” Fraga, 53, the founder of hedge fund firm Gavea Investimentos Ltda in Rio, said of Lemann and his partners. “They are fantastic managers and entrepreneurs.” Gavea owns a stake in Buenos-Aires based Arcos Dorados, the operator of some McDonald’s Corp. franchises in Latin America, and has a share in Lojas Americanas.
Swiss Father
Lemann, ranked by Forbes as Latin America’s third-richest man and the 48th wealthiest in the world, is the son of a Swiss businessman who grew up in Rio and went to Harvard in Cambridge, Massachusetts, to study business.
In 1961, he graduated with a degree in economics and later returned home to work in finance. Dines said he asked Lemann to write a stock market column at Jornal do Brasil even though he had never worked as a journalist. Soon after, Dines canceled the gig because Lemann was establishing a brokerage.
In 1971, Lemann, who also has a master’s in business administration from Harvard, founded Garantia in Rio and it soon became a place where talent vied to get jobs. Garantia landed assignments for multinationals including Philip Morris International Inc. and Colgate-Palmolive Co., both based in New York, helping them make acquisitions in Brazil to expand in Latin America’s largest economy.
Entrepreneurial Spirit
“He always led by example while trying to give us room to be entrepreneurial and grow,” said Fraga, the chairman of Sao Paulo-based BM&F Bovespa SA, the operator of Latin America’s biggest stock exchange. “It was clearly a meritocracy, capable of attracting and keeping people with great talent and energy.”
His early success was almost marred by failure. In 1971, Lemann and his partners paid $800,000 for a seat on the Rio de Janeiro stock exchange, according to a December 1996 report in Forbes magazine. Several weeks later, the market fell 60 percent and they almost lost all their capital, Forbes said.
Garantia bounced back and, in 1998, was acquired by Credit Suisse First Boston for almost $1 billion, including later payments tied to performance, according to Haddad. Lemann went on to found an investment firm with Sicupira and Telles called GP Investimentos. Among its first moves was to buy a stake in Lojas Americanas. By the time they sold their stake in GP Investimentos in 2004, the partners had boosted assets to 3.6 billion reais ($2.1 billion) and delivered an average annual return on investments of 23 percent in dollar terms.
Lemann has used some of his wealth to help improve education in Brazil, where the illiteracy rate was 9.7 percent last year, establishing two foundations working on different fronts.
‘Better World’
Fundacao Lemann, founded in 2001, provides courses to public school directors and municipal education secretaries to help them cope with the challenges of working in Brazil’s school systems. It has a budget of about 10 million reais.
“His view is clearly that what moves the world are the people,” says Ilona Becskeházy, 45, managing director at Fundacao Lemann, in a phone interview from Sao Paulo. “The country depends on the quality of these people — and the intrinsic qualities they learned through education.”
Fundacao Lemann’s website opens with a phrase signed by its founder: “To help people achieve their potential and support them so they, on their turn, can help others in the future is a way to make a better world.”
Beach Trip
Another Lemann foundation, Fundacao Estudar, was started in 1991 and offers scholarships to Brazilians to study economics, business, public policy and law, said Managing Director Thais Junqueira Franco Xavier. “The idea is to form efficient and capable people,” she said.
Even as he uses his wealth to shape Brazilian society, Lemann is known for his proletarian values. Haddad recalled a popular story told about Lemann from the 1980s — when Lemann was traveling in his Volkswagen for a weekend at the beach and stopped to refuel his car. As he was pumping gas, bandits rolled up to rob the place, completely overlooking the billionaire in their midst.
“As he was dressed with simplicity and had an old Passat, they thought he was a nobody,” said Haddad. “If they knew he was Garantia’s main shareholder, Lojas Americanas’s main shareholder, they would have probably tried to do something with him.”
To contact the reporter on this story: Fabiola Moura in New York at fdemoura@bloomberg.net
©2010 BLOOMBERG L.P. ALL RIGHTS RESERVED