Billionaire Cisneros to Team With Chinese Banks in Latin America Oil, Gold

Venezuelan billionaire Gustavo Cisneros is setting up joint ventures with Chinese banks to carry out investment in Latin American commodities industries.

The chairman of Cisneros Group of Companies, who is relinquishing operations of the firm to his youngest daughter Adriana, said he aims to push through projects delayed by state inefficiencies through partnerships in energy, agriculture and metals. Deals may take place in countries including Brazil, Colombia, Mexico and Panama, Cisneros said.

“You’ll probably see in the next year or two a lot of Cisneros China or China Cisneros in Latin America and it’s going to be whatever comes, whether it’s oil, gold or big cattle operations,” Cisneros, 66, said yesterday in an interview at Bloomberg’s headquarters in New York. “They understand they don’t have the knowledge to run these businesses. They need results now and we can provide results.”

Cisneros, who first traveled to China about 30 years ago with billionaire philanthropist David Rockefeller, is expanding into deals with the Chinese after shedding beverage and consumer-goods companies and America Online Latin America since the early 1990s to focus on his Venevision television network. Banks in China, the third-largest source of foreign direct investment in Latin America, lent Brazil’s state-run Petroleo Brasileiro SA (PETR4) $10 billion in 2009 in exchange for oil supplies, among credit provided to secure resources from the region.

Photographer: Chris Goodney/Bloomberg

Venezuelan billionaire Gustavo Cisneros sits for a photograph in New York, on June 16, 2011. Close

Venezuelan billionaire Gustavo Cisneros sits for a photograph in New York, on June 16, 2011.

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Photographer: Chris Goodney/Bloomberg

Venezuelan billionaire Gustavo Cisneros sits for a photograph in New York, on June 16, 2011.

China Development Bank

Since 2007, government-owned China Development Bank has lent more than $68 billion to Venezuela, Turkmenistan, Ecuador, Brazil and Russia in exchange for crude and gas shipments. Liu Kegu, a bank adviser, said in a Jan. 15 interview that the lender would extend credit to Chile, Peru and some African nations.

China Investment Corp., the country’s $300 billion sovereign wealth fund, is targeting mining, real estate and infrastructure investments in the Americas, Felix Chee, the fund’s representative in Canada, said at a CFA Society Conference in Toronto today. The fund has three “active deals” under consideration, he said.

Export-Import Bank of China Ltd., the nation’s policy lender specializing in cross-border trade and investment, and Agricultural Bank of China Ltd. agreed last year to tie up with Inter-American Development Bank to expand their trade finance activities in Latin America.

ICBC in Brazil

Industrial & Commercial Bank of China (1398) Ltd., the nation’s largest commercial lender, said in April it intends to set up a full-service bank in Sao Paulo and become the second Chinese lender after Bank of China Ltd. to have a branch in Brazil.

Photographer: Chris Goodney/Bloomberg

Cisneros is relinquishing operations of the firm to his youngest daughter Adriana. Close

Cisneros is relinquishing operations of the firm to his youngest daughter Adriana.

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Photographer: Chris Goodney/Bloomberg

Cisneros is relinquishing operations of the firm to his youngest daughter Adriana.

Beijing-based spokespeople at China Development Bank, Export-Import Bank and Bank of China didn’t answer calls to their offices, while ICBC’s Beijing-based press officer Wang Zhenning declined to comment.

“The fact is, China needs to do heavy investments,” said Cisneros, who has homes in New York, Miami, the Dominican Republic and Spain. “If we put together our talents for new businesses in Brazil, Colombia, Mexico -- something that has an interest for China -- we can match those interests and do very well.”

China accounts for 9 percent of foreign direct investment in Latin America, trailing only the U.S. and Holland, according to the United Nations’ Economic Commission for Latin America and the Caribbean.

Cisneros also is operating in the world’s fastest-growing major economy in a partnership with China Central Television to broadcast original television content and to provide expertise in producing local programs.

Hispanic Market

The Cisneros Group, which took in $1.5 billion of revenue in 2010 and has its headquarters in Miami, also is expanding businesses aimed at the U.S. Hispanic market as well as in nations across Africa and the Middle East. Telenovelas, a type of Spanish-language soap opera, produced by Cisneros will begin to air in Iran and Afghanistan this year, said Adriana Cisneros de Griffin, who sat next to her father during the hour-long interview.

Photographer: Chris Goodney/Bloomberg

Adriana Cisneros De Griffin serves as chairwoman and director of strategy at Cisneros Group of Companies. Close

Adriana Cisneros De Griffin serves as chairwoman and director of strategy at Cisneros Group of Companies.

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Photographer: Chris Goodney/Bloomberg

Adriana Cisneros De Griffin serves as chairwoman and director of strategy at Cisneros Group of Companies.

Cisneros Group provides Univision, the leading Spanish- language broadcaster in the U.S., with 40 percent of its content, and the airing of the Eva Luna telenovela in 2010 was more successful than the company anticipated, she said.

Soap Operas

“There were more people seeing TV in Spanish, our soap operas in the U.S., at moments than seeing NBC, CBS or Fox,” said the 31-year-old vice chairwoman and director of strategy. “With Univision we designed an interactive strategy that resulted in our last show having 9.7 million viewers; we thought our audience was 7 million.”

Cisneros’ youngest daughter, who spent hours as a child in Venevision television studios and traveled with her father to bring DirecTV (DTV) to Latin America when she was 13, handles the company’s Brazilian business while her father focuses on China and long-term strategy. A graduate of Columbia University and New York University who resides in Manhattan, the younger Cisneros is creating interactive online programs and working with Sprint Nextel Corp. (S) on mobile programming.

“Media has become a really interesting part of the market to be in, everything happening with digital interaction is fascinating, everyone trying to make a business model around all of that,” she said. “But it’s fast-changing and we keep changing our strategy for interactive and digital on a monthly basis and I think we have to because that’s the new nature of the beast. What we’ll be able to do with our content in the coming years is amazing.”

Inheritance

Gustavo Cisneros inherited the company from his father in 1970 and took over a fortune built by expanding Venevision and representing U.S. brands such as Studebaker, PepsiCo and Burger King in Venezuela. Cisneros and his family are worth $4.2 billion, according to Forbes magazine. The 58-year-old company employs about 8,000 workers.

The group was one of the largest bottlers of Purchase, New York-based PepsiCo Inc. products outside the U.S. until the 1990s, when Cisneros and his brother Ricardo decided to switch to Atlanta-based Coca-Cola Co. (KO) They sold the carbonated beverage business a year later.

In Venezuela, Cisneros Group has the largest privately owned television network, a local baseball team and through Cerveceria Regional SA continues to compete with the largest brewer, Caracas-based Empresas Polar SA, for market share. Polar now has a joint venture with PepsiCo.

Cisneros said he chose his youngest daughter to succeed him because she showed an interest in media and a passion for trying to run the business. The elder daughter, Carolina, has dedicated herself to her five children, while his son Guillermo handles family finances, Cisneros said.

Sense of Duty

Adriana said she always knew she wanted to be in media, “but I thought I would come work for my family when I was 40 and not 25. When I saw my brother didn’t want to take the position that he was groomed for, out of sense of duty I said let’s do it sooner than later.”

Both are optimistic about the outlook for their business in Latin America.

“We have the best decade of Latin America ahead of us, of course this or that happening, but the numbers objectively,” Cisneros said before being interrupted by his daughter.

“It’s our decade,” she said.

“It’s going to be fantastic,” Cisneros continued. “Any way you look at it, politically, economically, culturally, Latin America has come into its own.”

To contact the reporter on this story: Daniel Cancel in New York at dcancel@bloomberg.net.

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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