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In Crisis, Entrepreneurs Accept Investments at a Lower Price: Jorge Paulo Lemann

In a virtual event held by Volpe Capital, businessman Jorge Paulo Lemann and former SoftBank COO Marcelo Claure said that investors can take advantage of the crisis by paying less in stakes

Jorge Paulo Lemann, co-founder of 3G Capital, speaks during the Milken Institute Global Conference in Beverly Hills, California, USA, April 2018.
May 10, 2022 | 08:01 am

Bloomberg Línea — In another week that began with strong volatility and a wave of risk aversion pulling stock markets down and raising the dollar against Latin American currencies, the Brazilian billionaire businessman Jorge Paulo Lemann said he has experienced many crises, but that there is always an opportunity, even in recessionary scenarios. The statement was given on Monday in a panel with former SoftBank COO and investor, Marcelo Claure, presented by Volpe Capital, at Volpe Day.

“I have been through many crises. I went bankrupt when I was 26 at a finance company. We bought Anheuser-Busch and the crisis came, nobody knew that the financial system would survive. It looked very bad, but it became the most profitable company we have at the moment. There’s always an opportunity in a crisis, it’s an incredible moment when prices go down, and entrepreneurs accept investment at lower prices. Invest in them at that moment”, said Lemann.

The richest man in Brazil, the businessman shares control of Anheuser-Busch InBev, the largest beer company in the world, with his Brazilian billionaire partners Marcel Telles and Carlos Sicupira. The trio, partners for almost 50 years, also have stakes in Kraft Heinz and Restaurant Brands International, the company behind Burger King, as well as controlling stake at Brazil’s retailer Lojas Americanas.

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In this difficult time for the global economy, people are losing money: from amateur traders to tech and retail investors, even Nubank CEO David Vélez has seen his fortune fall by $4 billion. Lemann himself has lost $1 billion in the last year to date, according to data from Bloomberg’s Billionaires Index.

But, according to Lemann, when things don’t go as expected, there is an opportunity. “We had been looking to buy Brahma for many years. One afternoon they called me and asked if I still wanted to buy the company. It was before the election between Collor and Lula, and nobody knew who would win. I said OK, I want to buy it, and we bought the company 10 days before the election,” Lemann said.

But in doing pension fund due diligence after buying Brahma, the entrepreneurs discovered huge financial problems, which they eventually managed to fix. Today, they hold the same share of the company as when it was acquired. “When something goes wrong, don’t give up what you were doing. If it’s good, keep going,” Lemann advised during the event.

Lemann and Claure attended Berkshire Hathaway’s annual meeting in Omaha in recent days. According to Claure, the mood among investors was darker, with investors worried that the bonanza time is over. “On the other side of the street, at the Blockchain and cryptocurrency conference, the mood is the opposite. It’s a climate of disruption, with people being hired because companies are growing. It depends on which side you are on, if you are a traditional hedge fund and you are trying to predict the market, you will have a tough time,” said Claure, a Blockchain technology enthusiast who has a small part of his portfolio invested in different crypto assets.

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For him, long-term venture capitalists will have excellent opportunities not only because the price of holdings is lower, but because of innovative entrepreneurs.

Now is the time for entrepreneurs to execute the PowerPoint they presented to investors and show the numbers they committed. Those who can execute will win, but those who are professional fundraisers will suffer. The world gets more interesting about what bets are made when capital is no longer a commodity,” Claure said during the event.

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