TVX, MMX, LLX, MPX, OGX, BFX ... more than alphabet soup, the names of these companies can be confused with the old call letters of ham radio operators. But no. These companies have something more in common than just the X at the end of all of their names. In the first place, their creator, Brazilian entrepreneur Eike Batista. Secondly, the business formula behind each of these companies: the are bold, propelled by a nearly religious faith, more typical of Canadian or United States capitalism than the more conservative Latin America. Thirdly, because the last five were in the limelight of the Latin American business world in 2007. But, what is the fixation with the letter X? The X represents multiplication, according to the entrepreneur.
And multiplication is what his companies have experienced lately. After creating MMX in December 2005, from three projects--an iron mine, a future ore pipeline, and a planned superport in the north of the state of Rio de Janeiro- -Batista ventured into a public stock offering in July 2006, which managed to raise US$460 million. Not bad for a company with small iron production and ambitious green projects. But MMX’s reputation was earned in April 2007, when it sold 49% of Minas Rio, one of the company’s projects, to the mining giant Anglo American, for US$1.15 billion. At presstime, in January 2008, Anglo American was in talks with MMX to purchase the remaining 51% of Minas Rio and 70% of Amapa, another MMX’s iron project, for US$5.5 billion.
How does he do it? To begin with, Eike has a last name with legendary resonance in Brazil. His father, Elicer Batista was the founder of Vale do Rio Doce Company (privatized in 1997 and recently rebaptized as Vale), the natural resources giant that became one of the biggest development myths in Brazil.
But the strongest marker of Eike Batista’s DNA is his risk-taking spirit. He wasn’t speed boating world champion in the early 90s for nothing, and in 2006 he broke the speed record between the ports of Santos and Rio de Janeiro, reaching speeds of 180 kilometers per hour with his Spirit of Brazil, a million dollar boat that, according to the Brazilian magazine Nautica, is the fastest in Brazil.
The capitalist version of this risk-taking spirit materialized in the late 80s, when he launched TVX Gold on the Vancouver Stock Exchange, a junior focused on gold projects that, among other companies, was a partner in the disappeared Placer Dome in the development of La Coipa, in Chile. When he left TVX in the late 90s, he received US$800 million for his share in the company. For MMX, Eike Batista surrounded himself with the star executives from Vale, which has become another mark of his strategy. For OGX, the company he created to explore petroleum and gas deposits, he recruited the top executives from Petrobras and put Francisco Gros at the helm, a prestigious Brazilian executive who was president of Petrobras, of the state development bank BNDES and Fosfertil, the largest fertilizer manufacturer in the country.
Batista’s gambles are focused on hot sectors. In addition to this company, in March 2006, Batista created LLX, specializing in logistics; MPX, that has seven thermoelectric projects in Brazil and vChile either under construction or under study; and BFX, focused on reforestation and charcoal production for fuel.
For some observers, Batista’s plans are too ambitious. The entrepreneur has had various stumbles, such as a failed jeep factory he set up in the north of Brazil, and his iron and steel project in Bolivia that went belly up with the nationalizations of president Evo Morales, who rescinded the contract.
For now, its watch and wait. OGX was created in June 2007, and five months later became the main player in the bidding issued by the National Petroleum Agency, with the highest number of awards. At the close of this issue, Batista was preparing for the public offering of MPX on the Sao Paulo Stock Exchange, hoping to raise some US$1.4 billion. If everything comes out as planned, in a few months Batista will find himself in charge of a US$15 billion empire. Independently of any privatizations or inheritances. With pure pluck and by seducing star investors, partners and executives. The capitalist dream come true.