Ben Steinbruch: Going Far Beyond Brazil
Benjamin Steinbruch is becoming a fixture at the head of major boardroom tables. In just the past two years, Brazil's fastest-rising executive has become chairman of South America's biggest steelmaker, Companhia Siderurgica Nacional (CSN), of privatized mining giant Vale do Rio Doce (CVRD), and of Rio de Janeiro electric utility Light. When he's not overseeing those businesses, he focuses on Vicunha, his family's textile, banking, and telecommunications conglomerate.
Now, Steinbruch, 44, wants to take his corporate troupe onto the global stage. On Nov. 14, he was scheduled to ring the opening bell at the New York Stock Exchange to mark the offering of CSN's American depositary receipts (ADRs). He will lead Mexican and Chilean partners in bidding for Venezuela's state-owned steelmaker, Sidor, in an auction expected next month. In March, $2 billion worth of CVRD shares still held by the government will be put up for sale in New York and other markets. Steinbruch may return to Wall Street later in 1998 to issue stock in Light. "Globalization is a two-way street," says Steinbruch, dressed in a blue denim shirt and jeans during a workday at his Sao Paulo office. "Foreigners are coming here, so if we want to succeed, we have to go abroad."
But global market turmoil and President Fernando Henrique Cardoso's austerity measures to protect the real could cloud Steinbruch's plans. The Sao Paulo stock market's plunge has chopped 13% off the price of CSN shares and 24% off CVRD's since Oct. 21. Steinbruch is hopeful, though, that investors will grab the chance to buy the companies' ADRs. This year's financial results, he says, will far exceed analysts' estimates of about $200 million net profit for CSN on sales of some $2.3 billion, and $500 million for CVRD on $4.9 billion in sales. "During times of panic, people forget the particulars and use generalities," says Steinbruch. "But after this crisis, they will start to analyze each company individually."
Relaxed and confident, Steinbruch is the most visible of a generation of executives emerging from Cardoso's ambitious privatization program. They are as comfortable cutting deals with tycoons in Tokyo as with bureaucrats in Brasilia. Steinbruch's partners in Light, which a CSN-led group bought last year, are Electricite de France and U.S. energy companies AES Corp. and Houston Industries Inc. Steinbruch is in preliminary talks, he says, with mining multinationals such as Anglo-American Corp. of South Africa and Britain's RTZ Corp. to explore both in Brazil and abroad.
In the 21st century, Steinbruch believes, companies from jeans manufacturers to steelmakers will have to attain huge scale or risk being run out of business. In Brazil, he predicts that within a year, 10 main steelmakers will be merged into no more than five--a consolidation he is actively pushing.
LONG HOURS. Steinbruch's biggest coup so far was his victory in last May's bidding for a controlling share of CVRD. In the weeks before the auction, Steinbruch worked around the clock to piece together a consortium with NationsBank Corp. of Charlotte, N.C., Brazilian asset manager Opportunity, and the employees' pension of Banco do Brasil, a state-owned bank. He won the prize with a $3.1 billion bid against a rival group led by Votorantim, Brazil's largest conglomerate, and Anglo-American.
At each of the three companies he chairs, Steinbruch has made a large imprint. For CSN, which was privatized in 1993, Steinbruch restructured the business into four semi-autonomous divisions reporting to the chairman. At CVRD, Steinbruch's partners agreed to break the sprawling conglomerate into mining, forest products, aluminum, and corporate units, with the head of each operating as would the CEO of a separate company. Underlying Steinbruch's business approach is a philosophy he calls "shared control," in which several partners hold small stakes. Sao Paulo-based Vicunha, jointly owned by the Steinbruch and Rabinovich families, owns just 14% of CSN, which in turn holds 13% of CVRD and 7.2% of Light.
With such a diverse collection of companies under his direction, Steinbruch's life has become a 16-hour-a-day juggling act. When he's not traveling abroad, Steinbruch stays at least three days a week in Rio de Janeiro, where CVRD, CSN, and Light are based. He returns to Sao Paulo a day or two before the weekend to tend to Vicunha and other family business. During the weekend he unwinds with his wife, Carolina, and their children, ages 2, 4, and 5, at his ranch outside the city.
Some think Steinbruch is too immersed in the day-to-day operations of his companies. "He can't afford to get involved in details like how many employees the Brussels office of CVRD should have," says a Sao Paulo analyst.
Vicunha, formed in 1966, began diversifying from textiles by opening an investment bank in 1989. When Brazil's privatizations began, Vicunha was among the first in line to buy the state jewels, starting with CSN in 1993. CSN in turn has bought stakes in railroads, a hydroelectric plant, a port facility, and a cement factory, besides CVRD and Light. Now, Vicunha is focusing on the sell-off of Brazil's telecom system with partners including Italian phone giant STET.
PROWLING. But Steinbruch's priority now is to turn CVRD and CSN into world-class multinationals that complement each other. Winning Sidor "would be fundamental for us in the consolidation of the steel sector in Latin America," he says. He is talking with U.S. companies about joining his bidding group.
To increase his companies' scale, Steinbruch is prowling for other partnerships and acquisitions. Forays into businesses such as Light have drawn criticism as diversions from steelmaking. But it's hard to argue with Steinbruch's results. CSN's profits have increased sevenfold since its privatization, and Salomon Brothers Inc.'s Maurico Reveco forecasts that CVRD's profits will grow 14% next year, to $715 million. Vicunha's prorated share of revenues of the companies in which it holds stakes has more than doubled, to about $2 billion, in the past five years. And now that he is taking his network of businesses abroad, Steinbruch may find himself at the head of boardroom tables outside Brazil.