Billionaire Diniz Sees Big-Ticket Deals With Brazil on Sale

  • Purchases include Wine.com.br, Benjamin Abrahao bakery chain
  • ‘You will see how much money will come in’ as economy improves

The Brazilian comeback isn’t far away, billionaire Abilio Diniz says.

The 79-year-old tycoon, one of the best-known businessmen in the country, thinks Brazil is “on sale” and investors will jump in when the economy shows signs of improving. The main opportunities are in agribusiness, services and information technology, he said in an interview in Atibaia, in the state of Sao Paulo.

Abilio Diniz
Abilio Diniz
Photographer: Nelson Almeida/AFP via Getty Images

Diniz is taking advantage of what he sees as low prices. His family office, Peninsula Participacoes, acquired a controlling stake of wine e-commerce company Wine.com.br last month. Earlier this year, he returned to his family roots, buying the bakery chain Benjamin Abrahao with fellow billionaire Jorge Paulo Lemann, Brazil’s richest man with an estimated $31 billion fortune. Terms of both transactions were undisclosed.

The optimism echoes a speech he made in New York last November, when he said Brazil was “very cheap for foreign investors.” Since then, the Ibovespa has jumped 34 percent in dollar terms, the second-best performing equity benchmark gauge in the world. The currency is up 20 percent this year.

“Everybody is looking to put some money here, and it is not from their wallets. Now they are pulling out checkbooks -- big tickets,’’ Diniz said. “If the economy enters a positive trend, you will see how much money will come in.’’

There are $38.3 billion in deals in the works in Brazil this year, between investments and mergers and acquisition operations, according to data compiled by Bloomberg. While the amount of completed transactions represents a drop compared with last year, it is up by 61 percent when adding pending and proposed deals. On Friday, Estacio Participacoes SA agreed to a preliminary deal to be acquired by for-profit education rival Kroton Educacional SA for about $1.66 billion.

Brazilian stocks posted the world’s biggest losses Tuesday as concern that growth will falter worldwide after Britain’s decision to leave the European Union spurred a rout in riskier assets.

Diniz made his estimated $3 billion fortune in groceries, building the bakery his father founded into the nation’s largest retailer -- which he then tried unsuccessfully to combine with Carrefour SA. The failed attempt resulted in conflicts with partner Casino Guichard-Perrachon SA and in him leaving Cia. Brasileira de Distribuicao, which operates the Pao de Acucar grocery chain. After stepping down in 2014, he went on to become the chairman of BRF SA, Brazil’s biggest processed-food maker, and this year leapfrogged Colony Capital as Carrefour’s third-largest shareholder.

The billionaire has said Carrefour, based in the suburbs of Paris, is doing “very well” in Brazil, and higher-than-forecast sales in the region have boosted the French company’s results. But overall, retail still hasn’t picked up in Brazil. Supermarket sales fell 2.1 percent in May, the second straight drop, with the economy on pace to contract 3.5 percent this year after a 3.8 percent decline in 2015.

Diniz isn’t positive on some other sectors, including industrial businesses. “Brazil lost the timing for industry,’’ he said. “The country needs to focus on the sectors in which we are dominant. There are more things in information technology than we can imagine.’’

Still, Diniz says confidence will improve as expectations build, bringing in new investments. Two years of negative economic growth and a political crisis that led to the suspension of President Dilma Rousseff have taken their toll on Brazilian companies. Bankruptcy filings doubled in May to 184 after rising 55 percent last year, according to data provider SerasaExperian. This month, telecommunications operator Oi SA filed for the biggest bankruptcy protection ever in Brazil, with about $20 billion in debt.

“Is the financial situation of companies complicated? Yes. Is it a disaster? Not at all," Diniz said. "It is not a catastrophe. I hate catastrophic thinking.’’

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