Latin America was afflicted 15 years ago by a miasma of
mismanagement that left its economies and companies hopelessly
at sea. Today economic and business conditions in the region
surpass those in the U.S. and Europe, thanks to new, hard-won
discipline among Latin political and corporate leaders.
The result is a level of ambition and confidence heretofore
unseen within the upper reaches of the regions management
ranks, one that has them taking rapid advantage of strong
domestic demand fueled by a growing middle class as well as
opportunities arising far beyond national and continental
boundaries. Those aspirations have spawned a new generation of
regional and global leaders, as reflected in Institutional
Investors second annual
Latin American Executive Team.
Consider Vale, the Brazilian iron-ore and nickel producer,
which has become the worlds second-biggest miner,
after BHP Billiton, the Anglo-Australian giant. Consider
Petrobras, Brazils oil major, which is expected to
surpass Exxon Mobil as the worlds biggest oil company in
market capitalization by 2020. Or Cía. de Bebidas das
Américas, known as AmBev, the Brazilian brewer whose
management helped to create Anheuser-Busch InBev, the
Belgian-Brazilian behemoth that today supplies Budweiser to the
bars of New York as well as Stella Artois to the brasseries of
Brussels. Or Itaú Unibanco, Brazils biggest
retail bank, which is now larger than Citigroup in market
value. The CEOs, CFOs and/or IR Professionals at all four
companies score at or near the top of IIs rankings this
year, and our profiles of such firms clearly reveal the
regions new swagger.
The world is becoming multipolar, says Almir
Guilherme Barbassa, chief financial officer of Petrobras, who
tops the CFO rankings in the Oil, Gas & Petrochemicals
sector. One of those poles is Brazil and the rest of
This year as last our rankings highlight the regions
best CEOs, CFOs and IR Professionals, as well as the companies
with the most-valued investor relations, based on a survey
that asked analysts on both the buy and the sell sides to
choose the top performers in their domains.
Of course, Latin Americas corporates are by no means free
of concerns. Long-term financing is still hard to come by,
particularly in Brazil, which inhibits infrastructure
development and, with it, companies ability to tap
growing demand. This limits growth, says Marcos
Aguiar, Brazil head at the Boston Consulting Group. Most
business people in the country would say that the
infrastructural problems create real issues for them,
Aguiar adds, noting that development agencies need to step in
to ensure investment takes place in this sector.
Also, global market volatility threatens what access to
capital the Latins currently enjoy.
Such constraints obviously would inhibit the
Latins ability to exploit burgeoning potential
outside the region as well as within. And much if not most of
that external potential could evaporate if, as feared, renewed
recession not only grips the developed world but spreads to
emerging Asia. Latin Americas escape from the
macroeconomic shadows has largely depended upon Chinas
own. Should the latter reverse course, cry for Argentina and
others as well.
The slowdown in the U.S. and the euro zone is starting
to create some concern, says Rogério
Calderón, director of investor relations and controller
of Itaú Unibanco Holding, whose CEO, CFO and investor
relations team top the rankings in the Banking & Financial
Services category by analysts on either or both the buy and
sell sides, and whose management team ties for fifth overall.
As long as things globally start to recover within the
next few months, Brazil will be fine, Calderón
adds. If it takes longer, then it will start to have a
The Chinese central bank has started to rein in growth but
by a small margin. And most experts believe that China is
unlikely to experience a severe economic slowdown, so the
impact on Brazil and the rest of Latin America of a contraction
abroad should be limited.
Moreover, some analysts cite the regions demographic
trends as an overriding positive, at least for the long term.
The demographics are in Latin Americas favor
the population is young and the proportion of people in the
working-age range as a percentage of the overall
population is high, says Boston Consultings Aguiar.
This will create a sweet spot for the next ten
Brazils central bank has nonetheless reacted quickly
to signs of slowing global growth by reducing interest rates.
Whether high inflation precludes its monetary authorities from
further reductions in the event of a continued slowdown remains
an open question.
In any case, Calderón finds a certain irony in the
fact that Latin America is currently in better shape than much
of the rest of the world. This is the first time that
Brazil and other Latin American countries have not been at the
center of the crisis, he observes.
What exactly has changed in Latin America? During the past
ten years, many countries in the region including
Brazil, Colombia, Mexico and Peru have targeted
reasonable levels of inflation, exerted greater control over
their fiscal deficits and dramatically improved their balance
of payments. Stability has dispelled uncertainty as a result,
and corporate executives have responded in kind.
Says Alejandro Valenzuela del Río, chief executive
officer at Grupo Financiero Banorte, Mexicos
third-largest retail bank, after BBVA Bancomer and Banco
Nacional de México, a subsidiary of Citigroup:
Before, the region was autarkic and its corporations
inward-looking. Today they have embraced globalization and
become outward-looking. When they see opportunities
abroad, Latin American companies seize them.
Banortes head of investor relations is the best among IR
professionals in the Banking & Financial Services sector,
according to sell-side analysts.
This year Brazilian executives dominate the list. They lead
corporations that are the strongest and most innovative in
Latin America and thus best able to confront the challenges of
the global economy. Even as global market volatility has made
raising capital harder throughout the world, companies in
Brazil have accumulated it by increasing their returns on the
strength of gross domestic product growth. Those in the
countrys consumer segments are content to stay home for
now, thanks to fast-growing domestic markets, while those
in commodities use their balance sheet strength to expand
The company that tops the ranking this year has had no need
for markets besides Brazils. The only company to have
eight first-place finishes, sweeping all the executive
categories, Rio de Janeirobased PDG Realty has become the
countrys biggest real estate developer and the largest
homebuilder in the world outside China. PDG is also the largest
real estate company, by market value, in the Americas,
something that would have been unthinkable before the U.S.
housing collapse decimated builders in that country.
PDG has ridden the wave of Brazils economic growth
during the past decade, benefiting from the emergence of a much
larger middle class and more affordable mortgage financing.
Roughly 39.5 million Brazilians climbed into the middle
class between 2003 and May 2011, according to
Fundação Getulio Vargas, a Rio-based
research institute. The country has a housing deficit of some
5.8 million units, according to the think tank.
PDG expects to sell 35,000 homes and apartments this year
and has another 100,000 under construction, compared with the
2,000 to 3,000 it produced in 2003. Net income this year is
slated to hit 1 billion reais ($572.5 million), up
from 22 million reais in 2006. Since PDG had its IPO, in
2007, the share price has climbed by 105 percent, more than
those of all but one other Brazilian company (shopping mall
operator BR Malls Participações) that have gone
public since then.
CFO Michel Wurman acknowledges the companys fortuitous
timing. We are very lucky that the market came to
us, says Wurman, who along with chairman Gilberto
Sayão da Silva and CEO José Antonio Grabowsky has
worked at PDG since it was founded, in 2003, by investment bank
Pactual, now part of BTG Pactual. The executives were close to
André Esteves, the prominent Brazilian banker who is now
the CEO at BTG Pactual. PDG was spun off three years later and
went public the following year.
But PDG has capitalized on its good fortune, quickly
developing a results-driven culture similar to that
of Pactual, with executive pay linked closely to
We learned very fast that you must treat shareholders
with all due respect, says Grabowsky. Our culture
has a sense of urgency. Our main competitors were
family-owned businesses. They did not really know how to
deal with shareholders. At Pactual we reported results every
semester. Today we report them quarterly.
PDG also acquired three large development companies,
Goldfarb Incorporações e
Construções, CHL Desenvolvimento
Imobiliário and Agre Empreendimentos
Imobiliários, in quick succession.
But financing for customers remains a challenge. Only during
the past three years have the countrys banks become
accustomed to granting mortgages for a 25-to-30-year period.
Currently, mortgage credit amounts to just 5 percent of
Brazils GDP, far below the levels in most developed
countries. Banks would like to see that rise to 15 percent