Oxstones Investment Club™At Brazilian real-estate company MRV Engenharia & Participacoes SA, electric fans whir in some rooms of its gray, low-slung building, saving the cost of air conditioning. That’s typical of Rubens Menin Teixeira de Souza’s approach to the business he founded in 1979 — and which has since vaulted him into the ranks of the world’s billionaires, with an estimated net worth of at least $1.6 billion, Bloomberg Markets magazine reports in its September cover package: “Hidden Billionaires.”
While other homebuilders targeted wealthy Brazilians, Menin began by selling to the lowest earners — the nation’s brick- layers and housekeepers, as he describes them. He provided loans to his own clients and trimmed costs by designing just a few standard models.
MRV, based in Belo Horizonte, a city of 2.4 million that forms Brazil’s industrial triangle with Rio de Janeiro and Sao Paulo, is today the nation’s No. 5 homebuilder by sales.
“We’re very Spartan at this company; it’s part of our DNA,” says Menin, 55, who’s MRV’s chairman and chief executive officer.
MRV is riding the surge of Brazil’s middle class. At least 36 million people in the country of 190 million have risen from poverty since 2003, President Dilma Rousseff said on June 6.
MRV’s revenue soared more than 31-fold from 2005 to 3 billion reais ($1.9 billion) last year, while profit jumped 26- fold to 634.5 million reais. Menin’s 152.4 million MRV shares — 31.6 percent of the company — were valued at 1.7 billion reais on Aug. 1. The stock was up 32 percent since the company’s July 2007 initial public offering on that date.
‘Important for Our Country’
Menin, taking advantage of the rise, shed 22.5 million shares in two sales totaling 329.2 million reais before taxes. He also sold an undisclosed number in July 2007. He’s gotten 64.5 million reais in dividends and says he has $500 million in assets outside of MRV stock and no personal debt.
MRV expects to benefit from a 2009 low-income-housing initiative that enables families earning 5,000 reais or less a month to buy a home at an interest rate as low as about 5 percent. That compares with about 47 percent on average for consumer loans. Menin advises on the program, under which the government agreed to provide loans for 79 percent of MRV’s 47,000 new projects last year.
“This is very important for our country,” Menin says, seated in his sun-drenched living room.
Construction Intern
Menin, who like his parents and grandfather studied engineering, saw the possibilities in low-cost housing when he was an 18-year-old intern supervising construction in poor areas. After graduating from the Federal University of Minas Gerais, a local public university, he and two cousins started MRV with $100,000 in savings and $30,000 in loans from their parents.
Competitors went under or abandoned low-income projects during the debt crisis in the early 1980s, when inflation soared, reaching more than 6,800 percent by 1990. MRV refrained from distributing profits to partners to keep growing.
With the end of hyperinflation in the mid-1990s, Menin expanded outside Belo Horizonte. He started a small lender in 1994 called Banco Intermedium. In 2002, he formed a rental- housing company in Miami named MIC MRV International Corp. and then founded MRV Logistica & Participacoes SA to build warehouses and business parks in 2008.
Simple Dwellings
MRV’s mainstay apartments are simple residences — a two- bedroom unit is about 500 square feet (46 square meters) — in gated complexes with swimming pools and playgrounds. They’re a step up from the urban dwellings of much of Brazil’s poor: violent shanty-towns known as favelas where houses made of cinder block and corrugated zinc crawl up steep hills.
“When you take a kid from the favela, an unhealthy place, and he moves to an apartment complex, he ends up having better health, better hygiene, better education,” Menin says.
Menin’s own apartment is a lavish 20th-floor triplex. A zebra-skin rug covers a marble floor, and a terrace with a hot tub overlooks Belo Horizonte’s hills.
While Brazil’s economic growth is slowing — to 4 percent this year from 7.5 percent in 2010 — Menin isn’t concerned. The country’s young population ensures that demand for housing will outpace supply, he says.
Tags: Banco Intermedium, BRAZIL, Brazilian real-estate company MRV Engenharia & Participacoes SA, emerging markets middle class, entrepreneurs, Latin America, low income housing initiatives, MRV Logistica & Participacoes SA to build warehouses and business parks, Rubens Menin Teixeira de Souza