A Secretive Mexican Tycoon Gets Investor Friendly
Fifty pounds lighter, Carlos Slim Helu is back in charge of his Mexican business empire after a brush with death following heart surgery in Texas last October. His sprawling conglomerate is getting a new look, too. Long known as a one-man show, the 58-year-old Slim is giving his three sons, ages 29 to 31, bigger roles to play in the array of companies he controls. Prodded by investors' complaints about the group's scant financial disclosure, he is also making public more information about his operations.
With such moves, Mexico's richest entrepreneur is belatedly trying to catch up with business practices long since adopted by other major groups in the country. Mexico has changed profoundly since he started building his conglomerate two decades ago. Markets have opened up, and investors can now choose among a number of blue-chip companies that pump out information on every move they make. Slim's near-death experience has highlighted the need for him to rethink his own personalized and close-to-the-vest style of doing business.
STOCK PANIC. One alarm bell was the dips in stock prices of Slim's companies that were triggered last fall by rumors that he had died. The market uncertainties were exacerbated by the group's month-long silence about his medical condition in October. Since then, stock prices of Slim's industrial-retail conglomerate, Grupo Carso, phone giant Telmex, holding company Carso Global Telecom, and financial group Inbursa have all recovered. And Slim, though still nursing an arm weakened by nerve damage, is again working long hours--and smoking his Cuban Cohiba cigars.
But he can no longer be so cavalier toward investors. "The level of disclosure from Grupo Carso has not been what it should be when you consider the size of the company and its importance to international equity funds," says Mary Bourque, an analyst for J.P. Morgan Securities in New York. When foreign investors first flocked to Mexico in the early 1990s, they made Grupo Carso and Telmex the market bellwethers. Even though Slim gave out little financial data, investors were willing to pay a premium of 15% to 30% over the combined net asset value of Carso's holdings. They were attracted by Slim's renowned skills--his eye for bargain-basement acquisitions, turnaround talents, and bottom-line focus.
Today, though, other conglomerates such as Grupo Alfa and DESC are packed with sharp MBAs from top business schools, and their smooth-running investor-relations departments maintain up-to-date Web sites. By contrast, at Slim's Mexico City headquarters, "you have to call 10 people to get the information you need," complains one analyst. Finally hearing that message, Slim has put second son Marco Antonio, 30, who heads Inbursa, in charge of investor relations. In June and July, he plans a road show to present the group's companies to investors in Mexico, the U.S., and Europe.
NO HURRY. Slim is grooming his sons to take over leadership of the group one day. He has put the eldest, 31-year-old Carlos, in charge of the group's retail operations, including 97 Sanborn stores and 40 Sears department stores acquired last year. Youngest son Patricio, 29, heads mining company Nacobre. But Slim, the group's chief strategist, seems in no rush to hand over power. "I was gone for months, but the infrastructure functioned perfectly," he says, chatting in his office surrounded by a half-dozen executives, including his sons.
Indeed, his companies are showing strong profits. Grupo Carso's sales were up nearly 8% in 1997, to $3.7 billion, with profits of $754 million. Grupo Financiero Inbursa, with $1.8 billion in assets, netted $448 million last year. And Telmex, despite stiff competition in long distance from global players AT&T and MCI Communications Corp., posted 1997 profits of $1.5 billion on $7.5 billion in sales.
While change is coming in the empire, Slim vows he won't drop his group's traditional reliance on developing in-house management. The formal education of his sons ended with them obtaining bachelor's degrees in business from a Mexican university. However, Slim has no intention of recruiting flocks of U.S.-trained MBAs just to reassure stock analysts. "We have a lot of young, talented people working for us who have made Carso what it is today," says Slim. Marco Antonio says that what he has learned from his father is the equivalent of an MBA in "business reality." In the aftermath of their father's illness, the brothers will have the chance to display such family knowhow.