A Chilean Dynasty's Manifest Destiny

Luksic Group is looking to expand beyond the border

Like the condor, Chile's national symbol, the high-flying Luksic Group hunts far and has a sharp eye for vulnerable targets. The Luksic clan, headed by patriarch Andronico Luksic Sr., 71, has put together a $2 billion conglomerate, from banking to telecommunications, that is the region's most diverse. Now, with more than $700 million in fresh capital from stock and bond issues, the family holding company, Quinenco, and its stable of businesses are set to pounce on new opportunities across the continent's Southern Cone.

Shrewd deals have been key to the Luksics' rise for decades. These days, major roles are being played by Andronico's sons, Guillermo, 41, and Andronico Jr., 43, respectively the chairman and vice-chairman of Quinenco. Andronico Sr. and Jean Paul, his 33-year-old son by a second marriage, run Antofagasta, a smaller family holding company. While consolidating at home, the Luksics are looking to expand abroad, especially in banking, copper products, and beverages.

That prospect persuaded eager U.S. and European investors to heavily oversubscribe a $270 million offering of Quinenco American depositary receipts in late June--the largest-ever international stock sale by a Chilean company. In July, Banco Santiago, the Luksics' banking flagship, sold $300 million worth of bonds in the U.S. and raised $150 million of capital from shares offered to existing stockholders.

KEEPING TABS. Despite such high-profile fund-raising, the Luksics remain one of Chile's most publicity-shy families. None would talk for attribution for this story. Working out of unpretentious offices in downtown Santiago, Andronico Jr. runs Quinenco's banking and financial services, while Guillermo oversees the industries, which include metals fabricator Madeco, brewer and soft-drink bottler CCU, pasta maker Lucchetti, telecommunications operator VTR, and the Carrera hotels.

Andronico Sr. is closest, though, to English-born Jean Paul, insiders say. Together, they own around 70% of Antofagasta, a London-traded holding company set up in 1980 for the family's mines and railroads. Antofagasta in turn has a 29% stake in Quinenco. There's some rivalry between the older siblings and Jean Paul. The sons swapped interlocking family stakes in preparation for the ADR sale, concentrating those of Andronico Jr. and Guillermo under Quinenco. But Andronico Sr. kept an eye on the reshuffling. "He lets his sons fight it out," says an insider, "but he has to give his O.K."

TRADE-OFF. Showing their bargaining skills, Guillermo and Andronico Jr. drove a controversial deal last year to repay $1.7 billion owed by Banco Santiago, the country's biggest bank, to Chile's Central Bank. The debt--a legacy of the massive 1983 bailout of the country's banking system--had been inherited by the Luksics and partner Banco Central Hispano, a leading Spanish bank, when they acquired a controlling share of Banco de Santiago, a predecessor bank, over the past decade. They merged it last year with Banco O'Higgins, a smaller Luksic bank, to form Banco Santiago. The Luksics agreed to pay off the debt by turning over 38.5% of Banco Santiago's shares, worth an estimated $800 million to $1 billion, to the Central Bank as part of a broad settlement of bailouts. The Central Bank's board, to clear the way for new banking legislation, accepted the deal, but Central Bank President Robert Zahler quit to protest it as one-sided.

Banking is a top priority in the Luksics' push across borders. With stakes in banks in Argentina, Peru, Uruguay, and Paraguay, they are aiming to exploit their competitive edge with knowhow and financial products developed in the highly competitive Chilean market. Madeco will use part of the ADR funds to refinance its recent purchase of a Brazilian company.

Heart problems have not slowed down Andronico Sr. In July, a consortium led by Mitsubishi Corp. and Industrial Bank of Japan agreed to put up $900 million in financing for his $1.3 billion Los Pelambres copper project. Takunari Ikegami, nonferrous metals manager at Sumitomo Corp., which is not part of the consortium, has few doubts that the Luksics can pull off the project. Having done business with them for years, he says mining operations are not their strong suit, but adds: "They're very good at buying and selling." That talent is taking the Luksics a long way, at home and abroad.

Before it's here, it's on the Bloomberg Terminal.