Batista Considers Partner to Tap $1.5 Trillion Assets

By Juan Pablo Spinetto and Stephanie Ruhle - May 1, 2012
Bloomberg
Brazilian billionaire Eike Batista said he’s considering partnering with an industrial group to help develop iron-ore, oil, coal and gold resources that he estimates could be worth about $1.5 trillion.

The sale of another stake in his EBX Group Co., following the $2 billion purchase of a 5.63 percent share by Abu Dhabi’s Mubadala Development Co., would help boost global investors’ confidence in his projects, the billionaire said yesterday in an interview on Bloomberg Television’s “Money Moves.” Rio de Janeiro-based EBX’s assets have the potential to yield 80 percent margins, he said, without elaborating.

“We have the privilege to work in the resources arena with very rich assets,” Batista, 55, said in the interview at the Milken Institute Global Conference in Beverly Hills, California. “With $1.5 trillion in underlying assets with 80 percent margins, just give me the time.”

Batista is raising money to diversify into industries ranging from precious metals to sports management, while investing in his existing iron-ore, oil, coal, shipping and power-generation companies. He said March 26 that he’s in talks with sovereign-wealth funds to sell an additional $1 billion stake in his empire of commodity companies.

“We just wanted to have maybe an extra stamp,” Batista said, when asked about why he’s selling the stake. “We like to have the structure audited and when somebody like Mubadala comes in, the world knows how deeply they go into the auditing process.”

Wealth Surge

The magnate’s net worth surged 39 percent this year to $31.3 billion, making him the world’s 10th richest person, according to the Bloomberg Billionaires Index daily ranking. His fortune declined $616 million yesterday after shares of oil explorer OGX Petroleo e Gas Participacoes SA, his largest holding, fell 2.1 percent in Sao Paulo.

OGX, which began production in January, estimates it has 10.8 billion barrels of recoverable crude and natural gas, worth about $1.1 trillion at current prices. OGX plans to ramp up production from about 11,000 barrels a day at present to 1.38 million barrels a day in 2019, or about half of Brazil’s current output.

Underlying assets are all the potential resources held by the company, including those that require geological research and investments to be turned into reserves for production, EBX said in an e-mailed response to questions.

“He’s counting his oil reserves and adding up all his assets to reach that value,” Rafael Andreata, an analyst at Planner Corretora de Valores, said in a telephone interview. “That’s not the market value of his companies.”

Interlinking Start-Ups

The son of a former Vale SA (VALE) chief executive officer, Batista built his fortune by selling shares in a series of interlinking commodity start-ups. He’s pursuing ventures ranging from gold and iron ore to technology and managing ATP World Tour tennis tournaments.

Batista’s main holdings are five publicly traded companies including OGX, shipbuilder OSX Brasil SA (OSXB3) and iron-ore producer MMX Mineracao (MMXM3) & Metalicos SA. He also controls LLX Logistica SA (LLXL3), which is building what the billionaire says will be the world’s third-largest port, and MPX Energia SA (MPXE3), his power generation unit.