Americanas’ $4 Billion Meltdown Hits 3G Billionaires Lemann, Telles, Sicupira

Three of Brazil’s richest businessmen have owned a stake in the retailer since 1982 and risk a reputational stain after accounting irregularities

Jorge Paulo Lemann, co-founder of 3G Capital.
By Daniel Cancel
January 13, 2023 | 12:01 PM

Bloomberg — Jorge Paulo Lemann, Marcel Telles and Carlos Sicupira have invested together for decades, earning a reputation as some of the most astute businessmen in Latin America and a combined fortune of $39.4 billion.

That reputation is poised to take a hit after one of their longest-running investments — Brazilian retailer Americanas SA (AMER3)— was plunged into crisis this week over accounting irregularities, sending its shares tumbling and shaving almost a half-billion dollars from their wealth so far.

After meeting through banking in the 1970s in Rio de Janeiro, the trio behind buyout firm 3G invested in Americanas in the 1980s and collectively own a stake around 30%. They held control for decades until 2021.

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The chairman of Americanas, Eduardo Saggioro Garcia, is also a partner and chief executive officer at LTS Investments, which is the family office for Lemann, Telles and Sicupira.

After Sergio Rial, a former head of Banco Santander SA (SANB11)in Brazil, joined Americanas as CEO on Jan. 2, investors pushed up the shares on expectations that he would engineer a turnaround of the retailer, which has struggled to incorporate new acquisitions and modernize its e-commerce platforms. Rial shocked investors on Wednesday by resigning, saying he had uncovered about 20 billion reais ($3.9 billion) of irregularities linked to supplier financing and dating back years. Chief Financial Officer Andre Covre also decided to exit, the company said.

That raises the question: How could some of Brazil’s most successful and admired business executives have missed such a massive liability in a company they’ve been involved with for so long?

“Every time you have a compliance problem it reflects on the whole organization and shareholders,’’ said Roberto Kanter, a post-graduate professor at Fundacao Getulio Vargas business school in Rio de Janeiro. “It won’t be a fracture point, but other investors with them may take a closer look.”Americanas shares plunged 77% on Thursday with bonds sinking to 38 cents on the dollar. The market selloff shaved some $218 million off Lemann’s wealth, though he’s still the richest person in Brazil with a fortune of $21.3 billion, according to the Bloomberg Billionaires Index. Telles and Sicupira are the second- and third-richest at $9.8 billion and $8.3 billion, respectively.

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The Americanas investment is not part of the 3G private equity structure. A spokeswoman for Lemann didn’t reply to a request for comment.

The market value of Americanas is now just 2.5 billion reais, compared with 8.8 billion reais at the start of the year.

While the $493 million collective financial hit may not be material for the Brazilian deal makers, they’ll likely have to keep supporting the firm financially during the independent probe and while it seeks fresh capital.

Americanas has more than 1,700 stores in Brazil that sell everything from televisions to refrigerators, as well as an e-commerce unit. It also owns a financial-services arm, kids apparel stores and recently acquired a chain of fresh fruit, vegetables and food markets.

Along with Warren Buffett’s Berkshire Hathaway Inc., Lemann, 83, Telles, 72, and Sicupira, 74, have done deals for Burger King and Kraft Heinz Co. (KHC) in recent decades. They also acquired blind maker Hunter Douglas and expanded their stake in Anheuser-Busch InBev (BUD). The three have long been stalwarts of Brazil’s business community, demonstrating the ability to grow beyond the home market and have global impact with investments.

While they’ve grown their fortunes over the past decade, the last five years have been rocky. The three have collectively lost about $16.5 billion — or 29% of their wealth — during that period. Much of that can be chalked up to Anheuser-Busch, whose shares have slid about 40% since the start of 2018.

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Despite resigning as Americanas CEO, Rial said that he plans to continue working with the top shareholders to try to right the ship. Of the billionaire trio he said, “I’m proud of associating with people like them. Pure-blooded capitalists.”

--With assistance from Vinicius Andrade, Jack Witzig and Felipe Marques

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