Brazil’s Batista Cancels EBX Sale After OSX Plunge

April 14 (Bloomberg) -- Brazilian billionaire Eike Batista canceled his planned initial public offering of holding company EBX Group Ltd. after raising $3.9 billion less than he first sought from the sale of shipbuilding unit OSX Brasil SA.

“There is no way today we will consider an IPO of EBX,” Batista, 53, said late yesterday in an interview at the company’s headquarters in Rio de Janeiro. “The total market value of our companies now is $44 billion. Before $100 billion, $120 billion, we’re not doing an IPO of EBX.”
Batista, who said March 30 he was “ready” to take his sixth company public once equity markets improved, changed strategy after four Brazilian share sales priced below their anticipated range this year and state-controlled oil producer Petroleo Brasileiro SA said it would raise as much as $25 billion through new stock by the end of June. OSX fell 24 percent since its March 18 IPO
Chinese Demand

Batista expects Brazil’s economy to grow about 5 percent this year and Chinese demand for natural resources to increase, factors that he says will help his companies outperform the Bovespa index for a second year. His LLX Logistica SA port operator rose 570 percent in 2009 compared with an 83 percent gain in the benchmark Bovespa index. This year LLX is down 11 percent compared with a 3 percent rise in the Bovespa.

Batista’s changed strategy on EBX reflects concern over the planned Petrobras share sale that has created “a big overhang” in the market, said Duncan Littlejohn, who manages $1.6 billion in global private equity funds at Paul Capital Partners in Sao Paulo. “If you compare the numbers that will be raised in one issue, that’s close to several years of new issues,” he said.


OSX Sale


OSX raised 2.45 billion reais ($1.4 billion) through the sale of about 3.06 million shares for 800 reais each after Batista reduced the overall offering by as much as 67 percent. The company, based in Rio de Janeiro, has never reported a profit and its main assets are 3.2 million square meters of oceanfront property in Santa Catarina and guaranteed orders from OGX Petroleo & Gas Participacoes SA, Batista’s oil company.


Four Listings



In the first quarter of 2010, four companies listed shares, raising 4.7 billion reais, according to the Web site of the Brazil’s BM&FBovespa SA exchange. In the U.S., 23 American companies have completed IPOs this year, raising a total of about $4 billion, and have outperformed the Standard & Poor’s 500 Index by an average of 4 percentage points, according to data compiled by Bloomberg.



Batista’s OSX was the fourth company to sell shares below the estimated price range in Brazil this year. Port and highway operator EcoRodovias Infraestrutura & Logistica SA was the first to price within the range when it sold shares last month.



“When you’re the one who wasn’t very successful, you need to go back with a great story,” Eric Conrads, a hedge fund manager at Mexico City-based Armada Capital SA, said in a telephone interview yesterday when asked about the prospects for another Batista IPO. “I think he will go back to the market with the right timing. It’s too early though.”



All of Batista’s companies have the letter X in their names, something he expects will help him prosper.



“I used to have my gold company called TVX, an abbreviation for Treasury Valley Exploration,” he said yesterday. “It had the X as its stock symbol. It gave me always this luck.”



Visiting Executives



Batista said a group of his executives will meet April 16 with 114 representatives of 65 companies “who are eager to come to Brazil and build factories” at his port project, Porto Acu, in northern Rio de Janeiro state. Batista, who is lobbying for investment as officials from Brazil, Russia, India and China meet in Brasilia this week, said yesterday the project may attract $40 billion over 10 years.



Porto Acu is the closest point to Asia from the Americas coast of the Atlantic, according to Batista. Wuhan Iron & Steel Group, China’s third-largest steelmaker, paid $400 million in November for almost 22 percent of Batista’s MMX Mineracao e Metalicos SA iron-ore company. The companies also plan to jointly build a steel mill at the site, costing as much as $5 billion. MMX gained 1.2 percent to 4.07 reais.