JORGE PAULO LEMANN, A LEAN, HUNGRY MOGUL
By Samantha Pearson
Jorge Paulo Lemann, Brazil’s richest man and founder of private equity firm 3G, is perhaps the least Brazilian of the country’s billionaires — the consequence of both fear and ambition.One Tuesday morning in 1999, gunmen tried to kidnap his three youngest children as they made their way to school. In shock, he moved his family to Switzerland, his father’s native country, where Mr Lemann has lived ever since with his wife, Susanna.
But it is also a desire to own a slice of America’s best-known brands that has taken the 75-year-old financier away from Latin America. In the past decade, Mr Lemann and 3G’s other Brazilian founders, Marcel Telles and Carlos Sicupira, have spearheaded some of the consumer industry’s biggest deals.
After helping to create the world’s largest brewer, AB InBev, in 2008, the men took Burger King private in 2010. Three years later they joined up with Warren Buffett to buy Heinz, in a $27bn acquisition that turned out to be a mere prelude to the $46bn megadeal announced this week. The merger will combine the venerable ketchup maker with Kraft, whose contributions to American gustation include Kool-Aid powdered drinks and Oscar Mayer hot dogs. It is an illustration of how 3G’s fortunes have become detached from those of Brazil, a country now on the brink of recession.
Aside from his global ambitions, the Harvard-educated former tennis champion is known for his brutal efficiency. Within 3G, it is often said that “costs are like fingernails; they need to be cut constantly”, according to the Brazilian journalist Cristiane Correa, whose book Sonho Grande(Dream Big) chronicles the rise of Mr Lemann and his business partners. The trio’s parsimonious practices — firing staff, banning colour photocopies and using legal loopholes to lower their tax bills — have enraged workers and customers alike. But they have delighted investors; Burger King’s profit margin has tripled since 2010.
The group now promises to take its nail clippers to Kraft, a company whose products are unlikely to be a fixture in the lean Mr Lemann’s diet. A teetotaller who likes to snack on dried fruit, he has few known extravagances, aside from a love of exotic travel. He and his wife once took a holiday to the Gobi desert in China and Mongolia with Fernando Henrique Cardoso, Brazil’s former president and a close friend.
If Mr Lemann is salivating, it is because of the potential efficiency gains from combining the two companies. His disciplined approach carries echoes of his father, who owned a dairy factory and emigrated to Rio de Janeiro early in the 20th century. In spite of the family’s comfortable existence in the laid-back city, Lemann père extolled his protestant values of frugality and hard work, before a tram accident took his life while his son was barely a teenager.
“My mother then became a constant presence . . . she was very ambitious and really wanted me to be successful,” Mr Lemann has said, explaining how she persuaded him not to drop out of Harvard after he was reprimanded for setting off fireworks. Initially taking sport more seriously than his economics studies, he was a five-time Brazilian national tennis champion, and even played at Wimbledon. (Roger Federer, currently ranked second in the world, is reported to be a major investor in 3G.)
It was another sport — spearfishing — that led to Mr Sicupira, whom Mr Lemann hired to work at Garantia, a small brokerage in which he had bought a stake in 1971. Mr Telles had joined a year earlier. In the next few decades the “three musketeers”, as the men became known, built the brokerage into a $1bn investment bank, pioneering their distinctive management philosophy.
Aside from fanatical cost-cutting, the trio introduced a culture of communal ownership never before seen in Brazil, abolishing such hierarchical pomp as personal secretaries, dividing walls and reserved parking spaces. While keeping wages low, they attracted top talent with shares and generous bonuses, drawing inspiration from Goldman Sachs.
Just as Brazil’s artists and musicians appropriated disparate creative styles from around the world during the Tropicalismo movement in the 1960s, Mr Lemann “tropicalised” foreign management models to create something uniquely Brazilian. Credit Suisse, which bought Garantia in 1998, has since propagated the same practices throughout its Latin American operations.
It was after the trio founded 3G in New York in 2004 that the deal making began in earnest. Brahma, acquired while the three were still at Garantia, was combined with another brewer to form the Ambev group. It in turn absorbed Belgium’s Interbrew (in 2004) and America’s Anheuser-Busch (in 2008) to create AB InBev. Mr Lemann’s stake makes up a large part of his estimated $25bn fortune; the company’s dividends reportedly help fund 3G. Backing from Mr Buffett, whom Mr Lemann met while on the board of men’s grooming company Gillette, further enlarged 3G’s ambitions.
While future deals are likely to distance him further from Brazil, Mr Lemann has said he will never forget surfing in Copacabana — the waves that helped tropicalise his own Swiss mindset and which, by his account, taught him more about the risky path ahead than Harvard ever did. “In life you have to take risks and the only way is to practise,” he has said. “I practised in the waves, in tennis and then in business.”