Coverage | Rating Port Reports

Via Observatório da Imprensa

By: Rolf Kuntz

Translate: C. Brayton

The Brazilian government is busy trying to stimulate the modernization of and competition among the ports, the stated goals of Provisional Measure 595, approved by a final vote in Congress on May 16.

Brazilian ports are among the best in the world at processing iron ore but occupy 35th place in the handling of containers, according to a study executed by FIRJAN and reproduced in the May 19 edition of O Globo.

To stimulate competition, however, it will be necesary to multiply access routes to various terminals, the Estado de S. Paulo warned in an article published the same day.

The contrast between coverage by the Folha and O Globo is striking: the Folha refers insistently to the current “chaos” as O Globo looks forward to an advance in the rankings, as follows.

Brazilian ports are experiencing a paradox. In port terminals for the export of iron, Brazil leads the world rankings in first, second and fifth place. Among ports that handle containers, it falls to 35th place, bringing up the rear in a study released by FIRJAN, the Rio de Janeiro industrial federation. Investments in increased capacity, modernization of equipment and improvements in electronic cargo handling could elevate Brazil to 17th place within three years. This leap, according to experts, could be favored by the MP dos Portos, approved last week in Congress.

Returning to the Estado analysis and its prognosis of “chaos”:

“The lack of alternative routes ends up overloading the southern and southeastern coastal ports, while other ports are practically idle.  In the area of grains, nearly two-thirds of production for export leaves the country through Santos (SP) and Paranaguá (PR). The rest is divided among 16 terminals scattered along the coast,” the article said.

With these articles, the two newspapers enriched the reader’s understanding one of the hottest and complex issues of the week, the vote on the Provisional Measure of the Ports. The major news organizations made a mighty effort over the course of that week to follow the voting in the two houses of Congress. Moreover, they took the trouble to explain the issue in detail and demonstrate to readers how important it was.

Hard Work

There were long, hard negotiations in the lower house. The government had failed to mobilize its congressional base of support. For this reason, a last-minute push was needed to obtain votes for the measure without agreeing to disastrous amendments.  MP 595 was to lose its validity at midnight on May 16.

An MP is a bill sent down by the executive to be voted by the Congress, with a time constraint. The mechanism is often criticized as an incursion of executive power into the powers of Congress.

With some of its main allies working against the bill, the government had to make concessions and promise resources for projects financed by budget amendments.

According to journalistic accounts, the Treasury is to release R$ 1 billion, and more political appointments are to be made. Debates in Câmara went on well into the night and the decisive session lasted 22 hours. Lawmakers were photographed sleeping on the floor of Congress, but sleep is a luxury reporters do not enjoy.

Observing this marathon was only part of the mission. Day by day it was necessary to explain the principal changes proposed, their consequences, and the probable reaction of the government.  It may be argued whether the effort was consistently successful, but the performance of the media was undeniable. It would be very difficult to obtain, in these conditions, a better result.  On May 17, the major dailies were still fixated on final approval of the bill, obtained quickly and with surprising facility by the Senate. The effort to translate the details of the text for the lay reader and to indicate the likely presidential vetos continued on Saturday.

Complex Agenda

On Sundary, the newspapers made space on the front page again for the topic.  “Brazil may advance in global ranking,” informed O Globo, with a jump head for an article on the classification and future of the ports. “New ports will require new roads and railroads,”, was the top headline of the Estadão. In a more discrete reference to the story, at the foot of the front page, the Folha de S. Paulo registered the statement: “‘I am not an evil genius’, said Eduardo Cunha, an opponent of the MP dos Portos”. Cunha leads the PMDB in the lower house of congress, the part of vice-president Michel Temer and the government’s most powerful ally. Its resistance was the principal obstacle to the approval of the measure.

Given the prospect that certain articles may be vetoed, there is much new material that will have to be explored and explained in subsequent editions. To date, the MP dos Portos is the most complete and best-organized governmental initiative to increase efficiency and competitiveness of the Brazilian economy.  But it is merely one part of a much broader agenda, as exemplified by the Estado’s story on the condition of access roads connecting to the terminals.

Maluf | Corruption Comes Home to Roost

The Maluf-inspired Roberto Marinho Avenue — a Sambodian Big Dig

G1 reports

A court in the Isle of Jersey, a European fiscal paradise, has ordered the transfer of one million pounds sterling — some R$ 4.5 million — with ties to the family of federal deputy Paulo Maluf (PP-SP) to the municipal coffers of São Paulo.

The funds were released on Friday (May 24) and deposited in the account of a law firm representing the city in London.  The money will be returned to the public coffers on May 28, since May 27 is a holiday in Great Britain.

Jersey court denies Maluf appeals Jersey, orders Maluf-owned companies to return US$ 28 million to SP

Jersey condemns Maluf to repay embezzled funds

Odebrecht | Risks and Riches

Maracanã undergoes reconstruction

2013 has so far been a time of trials for the Brazillionaire, a caste that has benefited significantly in recent years from the Lula government’s ambition to breed and incubate Brazilian multinationals with acquisitive power — think of JBS-Friboi’s takeover of the venerable Swift & Co.

The most visible sign of decline has been the performance of companies in the Eike Batista group, whose OGX petroleum subsidiary leads losses recently in the BM&FBovespa and is reportedly seeking outside and foreign investment.

Via Brasil 24/7.

With close ties to PT, Odebrecht carries $R 62 billion in debt

The Odebrecht group, which operates in the petrochemical and biofuels markets, produces nuclear submarines, participates in the management of the Maracanã football stadium and is one of the companies benefiting most from the amended Port Law, has run up debts equivalent to 3.5 times its net assets of R$ 17 billion.

Eucatex | Twilight of the Maluf Family Empire?

If Mexico can finally imprison Elba Ester Gordillo, why shouldn’t the Brazilian finally bring down the notorious M.A.L.U.F?

The following excerpt is translated from the Estado de S. Paulo |  Portal ClippingMP. File it under «political grotesques».

SÃO PAULO – A São Paulo court has ordered the freezing of R$ 520 million from the Maluf family business Eucatex.

Or about US$ 260 million.  Eucatex, a eucalyptus grower, was founded by in 1951, thrived under the military dictatorship — which named Maluf mayor of the capital and later governor of São Paulo state. He is featured in a World Bank list of 150 notable corruption cases.

The measure was taken at the behest of the São Paulo state prosecutor’s office, which denounced insider transactions within the Eucatex group as part of a fraudulent effort to transfer Eucatex assets off the books and avoid payment of future court-ordered reimbursements as a result of various law suits against Maluf, accusing him of embezzling public funds while serving as mayor of São Paulo.

[The court] found that the prosecutor’s indictment demonstrates “the possibility of fraudulent reporting of assets” by Eucatex, but the ruling may be overturned if Eucatex can show that the penalty will drive the company into bankruptcy.

As the Folha de S.Paulo revealed in March, the prosecutor’s office believes that the family is trying to escape payment of court-ordered monetary awards by transferring assets to a newly founded member of the group, ECTX. Prosecutors see the transaction as fraudulent and believe its purpose is to “dehydrating” Eucatex of its assets.

Back in March, Eucatext VP José Antônio Goulart de Carvalho, denied the accusation. Goulart said the asset transfer to ECTX was undertaken because the new company would represent the vanguard of a new, more transparent governance model.

In July 2012, Eucatex transferred R$ 320 million of its assets to ECTX. In May and October, Eucatex released a Material Event statement to the market, saying it had initiated a “process of share reorganization” in order to transfer its assets.

ECTX, according to Goulart de Carvalho, is waiting for CVM authorization to launch an IPO in the capital markets.

Legal Troubles

Eucatex and the Maluf family are defendants in a case in which prosecutors have moved for the return of US$ 153 milhões that was supposedly stolen from the São Paulo city government, wired overseas and then funneled into Eucatex through various financial transactions.

There is also an open case on the Isle of Jersey involving the transfer of money by Maluf family members.

Overseas companies with ties to the Malufs have been ordered to reimburse US$ 28 million to the city of São Paulo, funds thought to be the fruit of fraudulent dealing involving the city government. These companies have appealed the decision.

In the present case, the Jersey court also ordered the freezing of Eucatex shares belonging to foreigners with ties to Maluf.

In a statement, Eucatex says it was not officially notified of the asset freeze involving R$ 520 million as ordered today by the São Paulo court.

There is another open case against Maluf, in fact, O Dia notes:

In the federal Supreme Court, Maluf and family were charged in 2011 on allegations of money laundering and using Eucatex to camouflage the misappropriation of public funds during Maluf’s term as mayor, from 1993 a 1996.

Maluf’s status as a sitting federal legislator entitles him to be tried by the Supreme Court.

Without Notice

In an official statement, the company says the motion to block its accounts has already been applied for by the prosecutor in 2009, and the application failed both in the first instance and on appeal.

According to Eucatex, the accusation is groundless given that the company’s net assets increased after the cretion of ECTX, from R$ 997 million in 2011 to R$ 1.1 billion at year’s end 2012.

“It should be recalled that Eucatex is a publicly traded corporation, with hundreds of shareholders, among them the federal legislator Paulo Maluf, who is not an executive of the company or even a member of  the board of directors,” the company added.

True: it is currently led by Maluf’s son Flávio. Interpol has an open arrest order on Flávio, from what I read. Otávio Maluf is chairman of the board.

The creation of ECTX was part of a general restructuring of the company with the goal of qualifying for the Novo Mercado listing segment of the São Paulo Stock Exchange, reserved for companies with superior governance standards and practices. The new company has been waiting since December for the CVM to rule on its registration as a publicly traded company.

Deals on Wheels | The Railway Pipeline

Source: Portal ClippingMP.
Authorship: Guilherme Soares Dias | Valor Economico

I have recently received an incentive to closely and constantly keep an on the Brazilian transportation sector as a whole — not just what the ALLs and LLXs are up to.

Intercity passenger trains are being readied to circulate again in at least nine Brazilian states with plans under active study. In most of these cases, the intention is to reuse existing freight lines for medium-velocity passenger service. The plans provide for management by private sector concessionaires and ticket prices competitive with intercity buses, in a attempt to take some of the strain off crowded highways.

Brazilian roadways — constantly subject to apocalyptic weather conditions, let it be said — are a nerve-wracking way to get around, although mirabile dictu the rodoviários — bus stations — hum industriously all year long, and especially around Christman, when Northeastern families make the trek to be temporarily reunited.

In all, 1,900 km of so-called “regional trains” will get off the drawing board sometime this year. The federal ministry of transport has detailed plans for six stretches of railway, while SUDECO — the Superintendency of  Center-West Development examines two rail lines in the Brasília region. The state of Minas Gerais is studying three new lines and São Paulo is planning another five.

After a study by BNDES, the national development bank, issued a list of  64 railway lines that could be used to move passengers, the transport ministry chose 14  priority project for evaluation in 2011. Two years later, six of these are underway under the auspices of BNDES and one another, under construction by the state of Minas Gerais, should be ready by the the end 2Q13.

After the studies are conducted, the proposals will be opened up to public discusion, after which the transport ministry intends to assess tender offers for projects starting in 2014. Bids closest to completion so far include the Londrina-Maringá connection, in  Paraná, and the Bento Gonçalves-Caxias do Sul connection, in Rio Grande do Sul, where feasibility studies have been conducted and public audiences will begin next month in which residents and local governments will have their say.

According to Euler Costa Sampaio, coordinator of studies on regional and passenger rail in the transportation ministry, the rail lines will likely operate on the basis of a Public-Private Partnership or a concession model. “We want to take advantage of the new rules for the railway sector, which instituted right of way [for passenger trains] on freight train lines,” he said..

Along certain stretches, such as the connection  Londrina-Maringá, the plan is to create a double-track road, given the heavy cargo loads resulting from the line’s proximity to the Porto of Paranaguá. Studies will show that demand will be sufficient for an all-passenger service, says Sampaio. Estimated demands runs around 36,000 passengers a day and 13 million passengers a year.

Another challenge for the regional lines will be entering urban zones, in places where they might cross paths with municipal transport. “We will have to provide quality and accessibility in order to compete with the interstate bus lines. Fairs will have to be in line with what it costs to travel by bus”, a Transportes official said.

In some cases, such as the Salvador-Alagoinhas connection in Bahia, whose study will be filed in June, indications are that the rail line can be extended another 40 km to Feira de Santana. With its  568,000 inhabitants, the city is the second most populous of Bahia state and is connected to Salvador by Highway BR-324, which sufferes from intense passenger and cargo traffic.

Another stretch of track featured in the  Sampaio reporte is the São Luís-Itapecuru-Mirim triangle, in the northern state of Maranhão, where the largest petrochemical center in the Northeast is under construction.

In addition to the six rail linkages already under study, the transport ministry expects to contract studies for another six: São Cristóvão—Laranjeiras (SE), Recife—Caruaru (PE), Campos—Macaé (RJ), Itajaí— Rio do Sul (SC), Campinas—Araraquara (SP), Santa Cruz—Mangaratiba (RJ), and Bocaiúva—Janaúva (MG).

Os projetos preveem que os trens atinjam de 80 a 140 quilômetros por hora para encurtar, em alguns casos, o tempo de percurso atual. É o caso do trecho entre Brasília e Goiânia que teria viagens de 50 minutos, enquanto as de carro e ônibus duram de duas a três horas. O trecho é estudado pela Sudeco. A linha seria de uso misto, sendo aproveitada para transporte de cargas, com ligação da Ferrovia Norte-Sul em Anápolis (GO), onde está prevista uma parada.

O diretor-superintendente da Sudeco, Marcelo Dourado, ressalta que 6 milhões de pessoas moram no entorno da futura linha e devem ser beneficiadas pelo novo modal de transporte. Ele destaca ainda que haverá melhora no escoamento de produção do agronegócio. A região concentra o segundo Produto Interno Bruto (PIB) meso-regional só perdendo para Rio-São Paulo.

“Essa ligação mais rápida vai incentivar a industrialização e a conurbação da região”, acredita Dourado. Os estudos estão sendo concluídos e a intenção do órgão é que a licitação ocorra até o fim do ano, as obras comecem em 2014 e sejam concluídas em até sete anos. O custo estimado é de R$ 1 bilhão. A Sudeco estuda ainda a ligação entre Brasília-Luiziânia (GO), onde já existe linha férrea e seria necessária adaptação para o trem de passageiros. “Essa seria uma intervenção mais rápida e barata. Seriam necessários dez meses e R$ 90 milhões de desembolsos para viabilizar a linha”, afirma Dourado. O trecho seria atendido por um Veículo Leve sobre Trilho (VLT). De acordo com o superintendente da Sudeco, os dois projetos têm chegada prevista na rodoferroviária da capital federal e devem desafogar as rodovias do Distrito Federal.

O governo federal prevê ainda estudos de um trem ligando as cidades do Triângulo Mineiro e outro mais ousado, da Superintendência do Desenvolvimento do Nordeste (Sudene), que planeja o “Trem da Costa Dourada”, linha de 2 mil quilômetros ligando Salvador ao Delta do Parnaíba (PI) pelo litoral, passando pela maioria das capitais do Nordeste. Apesar do apelo turístico do projeto até mesmo os estudos encontram dificuldade para sair do papel. “O Ministério do Turismo tinha se comprometido a bancar, mas ainda não conseguimos a liberação da verba. Agora estamos negociando com o governo espanhol para financiar os estudos”, diz o superintendente da Sudene, Luiz Gonzaga Paes Landim. Ele garante que o trem é viável e afirma que o projeto poderia ser “fatiado”, com início nos trechos de maior apelo turístico como Salvador -Praia do Forte (BA), Recife-Porto de Galinhas (PE), Natal-Praia da Pipa (RN) e Fortaleza-Canoa Quebrada (CE).

Para o coordenador de transporte de passageiros do Laboratório de Transportes e Logística (LabTrans/UFSC), Rodolfo Philippi, os projetos atuais estudados pelo Ministério dos Transportes terão viabilidade reforçada pelo transporte urbano, uma vez que o aproveitamento de linhas já existentes vai possibilitar estações no centro das cidades. “Em locais maiores como Londrina, Maringá e Caxias do Sul poderá haver mais de uma estação incentivando o locomoção das pessoas dentro das cidades”, diz.

Já o presidente da Associação Brasileira da Indústria Ferroviária (Abifer), Vicente Abate, recorda que nas décadas de 60 e 70 os trens de passageiros chegaram a transportar 100 milhões de passageiros por ano. “Com o desinvestimento do governo na rede, os trens de passageiros foram perdendo competitividade e começaram a ser desativados e foram substituídos pelo transporte de rodovias. Agora devemos ter novo momento de retomada do setor”, considera.

Hoje, apenas duas linhas férreas recebem transporte de passageiros no país: a Estrada de Ferro Carajás, entre São Luís-Carajás (PA), e a Estrada de Ferro Vitória-Minas entre Vitória e Belo Horizonte. Ambas são mantidas em projetos sociais da Vale e movimentam juntas 1,5 milhão de passageiros por ano.

Good fodder for a private Wiki on the subject.

Bicho + Globo + LIESA = RICO?

Source: O Globo.

RIO — Sunday, as the spotlights fell on the Special Group at the Sambadrome, an operation by state judicial police internal affairs launched 9 days ago found irregularities inside LIESA, the  League of Independent Escolas de Samba.

Entering the office of LIESA president  Jorge Castanheira, police served search and seizure warrants for evidence reflecting the participation of military police officers — among them, majors and colonels — in the provision of internal security for the festivities, contrary to a ruling by the state secretary of public safety.

Among the documents seized during Operation Finger of God II was a spreadsheet listing 37 names of security personnel hired to control access to the passarela in 2012.

At the time, state secretary Beltrame had already issued an order forbidding the involvement of police personnel in this capacity. In defiance of this rule, six colonels, five majors and a captain are listed in the document as security personnel in the employ of  MJC Eventos. The company has a services contract with Liesa and includes reserve colonel Celso Pereira de Oliveira among its partners.

O GLOBO was provided with exclusive access to some of the materials collected from Castanheira’s office. Seized at the location were two laptops, a CPU, a pen drive and a number of documents.

Give My Regards to the Big Turk

The discovery of police personnel moonlighting as Sambadrome security was not the only problem uncovered by the operation.

Among the papers seized was a handwritten letter of two pages, signed by a certain João Luis, which suggests that  the LIESA president is not exclusively busy with organizing the Carnaval parade.

The author says he is involved in a dispute with bicho banker José Caruzzo Escafura, aka Piruinha, and asks Castanheira to intercede on his behalf with bicho banker Antônio Petrus Kalil, aka The Big Turk.

Piurinha and the Rio Police

Piruinha I have heard of only in passing. The federal police union published the following anecdote.

The federal police investigations that resulted in Operation Black Op show that Haylton Carlos Escafura — the son of  José Caruzzo Escafura, a top Rio bicho banker  — relied on the protection of 10 state judicial police patrol cars during a transfer of automobiles belonging to the agency Euro Imported Cars, in Barra de Tijuca, in which he is a partner.

The security scheme was placed at the disposal of the racketeer by a ranking judicial police officer on November 24, 2010, on the eve of the invasion of the Complexo do Alemão. Wiretaps show that  Haylton was afraid that his auto agency would be targeted by rivals in the “nickel-hunter” gambling machine racket.

The intimate ties between Piruinha and state police may explain the fact that Haylton remains at large. He was one of 22 persons ordred arrested by a Federal court in October, when the federals kicked off Black Ops.

GLOBO has had access to excerpts of the wiretaps in which Piruinha’s son discusses the transfer of vehicles with Fábio Dutra Souza, his partner in the business, located on the Avenida Ministro Ivan Lins.

We, The Wise Guys

Returning to the most recent report by O Globo, and the letter leaked to it.

The author of the letter, dated 29 de setembro de 2011, begins by apologizing for pestering the LIESA president, then suggests that  Castanheira is fully aware of the rules imposed by the senior leadership of the bicho rackets of Rio.  “You and the other racketeers, with the exception of José Escafura, who for years now has not respected or enforced the rules of the mafia to which he belongs …”

Bills Were Paid by Bicho Bankers?

This was not the only connection to the bicho racket uncovered by police. During the same operation, police internal affairs, which visited another 13 addresses, discovered seven electricity bills in the name of Castanheira at a bicho operations center belonging to «Captain Guimarães». The discovery suggests that the LIESA president had his bills paid by the Captain.

Sought for comment by GLOBO, Jorge Castanheira denied any involvement with the bicho rackets and said he knows nothing about the letter discovered by police. He also denies that his electricity bills were paid for by “Captain” Guimarães.

— This proceeding is confidential. I have not had access to its content, but the press has. I cannot understand it. I have no ties to the bicho bankers. Today, I am president of LIESA, but for the last 28 years I have worked [as a general assistant]. During those years, I received a degree in economics. I receive hundreds of letters as president of LIESA, but none of them have anything to do with the bicho racket. I have nothing to do with any criminal conspiracy and I don’t know whose electricity bills these are.

Castanheira added that the only electricity bills on which his name appears are related to the offices occupied by LIESA from 1987 to 1995. Regarding the hiring of police to provide security, he said he had asked MJC to give preferential treatment to reserve officers.

Rule Applies to Police Reserves as Well

Despite what Castanheira says, reserve officers of the military police are not exempt from the disciplinary provisions of Decree 6579/83 …  According to this rule, military police must respect the police hierarchy both as current and off-duty or reserve police agents. Thus, Beltrame’s decree applies to retired PMs as well.

The public safety secretary said that it is looking into the irregular provision of services by its personnel during Carnaval. In a note, the department said that since 2008, more than 1,393 state judicial and military police have been expelled by the three internal affairs departments … for various misdeeds.

Finger of God II grew out of an analysis of data obtained during Finger of God I in December 2011. During the second phase, starting on 31 January 2012, the police applied for arrest warrants for bicho bankers Capitão Guimarães and Luiz Pacheco Drumond, aka Luizinho Drumond, both of them former  Liesa presidents.

Their warrant applications were not granted, however.

LIESA, The Untouchable Monopoly

Why not? This is the question that demands an answer when it comes to understanding how for nearly 18 years LIESA has dominated Carnaval in Rio from start to finish, from lighting to ticket sales, from the sound system to every other aspect of the festivities.

Including broadcast rights, which LIESA has ceded to the Globo network despite the best efforts of the state legislature to put an end to its rein.

Bicho + Globo + LIESA = RICO?

I posted a note on that general topic in 2007.

• Rio: “Why Does Globo Monopolize Carnival?”

Historically linked to the bicho numbers racket, LIESA has monopolized the organized Carnaval celebration since 1995. Year in and year out, promises of a competitive public auction have failed to pan out.

Rio mayor Eduardo Paes scheduled such an auction on various occasions and succeeded in conducting one for 2010, but the proposal as passed failed to meet certain requirements of the TCM, the city accounting tribunal.

This year, as I noted recently, TCM justices lost their free access to a Sambadrome sky box on the grounds that the justices should not be benefiting from a contract on which they will eventually have to pronounce judgment.

Unlike what the bicho bankers claimed, the terms as stated were not valid; the auction would have to be redone, but there was not enough time left. Thus did Carnaval 2011 fall back into the hands of LIESA.

Last year, alleging lack of competition in the auction for Carnaval 2009, a Rio court froze the assets of former mayor  Cesar Maia, who hired LIESA R$ 5.3 million.

And therein lies another tale.

Abril Wises Up | Educational Content Consolidates

Source: Fusões & Aquisições. Thanks for your careful and consistent coverage.

Abril Educação buys Wise Up for R$ 877 million

The value of the deal, which will be paid off in parcels, may be modified according to revenues reflected in the language school’s next earnings report.

Abril Educação today announced the acquisition of the English language school Wise Up in a deal valued at R$ 877 million. The deal will be paid off in three installments and could be subject to renegotiation depending on the 2012 EBITDA of Wise Up. Cash flow and net debt might also affect the value of the deal between now and the signing date.

Founded in 1995, Wise Up has  76,000 students at 338 franchise schools in 89 Brazilian cities.

I make that out to be R$ 11,540 to acquire a student.

Wise Up is an official English-language education supplier for the upcoming World Cup.

Above, Abril’s timeline for its accelerating acquisitive phase, starting in 2010.

Abril Educação comprises the Ática and Scipione textbook publishing houses, the SER curriculum factory, and others.

According to its Formulário de Referência 2012, the company,

in 2009 reached the broadest audience in the Brazilian education market in terms of students served, according to the Ministry of Education. We estimate that 71% of Brazilian students and more than 63% of elementary schools make use of our services or teaching materials. Our brands are recognized in all the markets we occupy. Our businesses have diverse sources of revenue which complement one another, creating synergies and capable of attending to all the needs of the elementary school and pre-university education cycle. We currently operate in five markets and are preparing an entry into two others …

The new businesses are prep courses for civil servant exams and the application of distance-education to language learning, a commitment born out by this recent bit of news. .

That 71% cannot be healthy for the Brazilian culture industry and educational policy.  71% plus vertical integration is why I tend to think of Abril as a tropical zaibatsu wannabe.

Abril has been in acquisitive mode for some time now. I have not run the numbers yet, partly because there are no precise numbers to be had. Even so, the financial grandiloquence of this deal ought to give us some inkling of the financial health and creditworthiness of the Grupo Abril in general.

The British network also has 36 units on deep sea oil rigs and another 21 schools located in four inland cities.

The deal is April’s third advance on the language-learning market. Last July, it purchased 51% of Red Balloon, geared toward children, at R$ 29.8 million. Abril also owns  6% of Livemocha, a U.S. distance-learning language franchise.

In a Material Event announcement to the market, Abril Educação says, “We have many other businesses in various educational markets, covering 4,500 Brazilian cities. There exist a number of synergies between these companies and Wise Up, whose shareholders will profit from the deal.  Abril also said that the deal signed with Wise Up calls for the medium and long-term retention of Wise Up senior management.

I wonder: Would this deal make rumors of an Abril IPO more or less likely? Relatório Reservado reports:

Abril Educação is preparing a follow-on offering on the Bovespa. It is said to be awaiting an improvement, however modest, in the international markets. But we have heard this song before. Contacted, the company had no comment.

Abril is extremely, aggressively competitive in this area of its business. A memorable example was the smear campaign conducted against a competing publishing house — up for the same public tender as Abril — for the provision of text books.

The group’s flagship weekly, Veja, screamed bloody murder, calling the rival publisher a purveyor of communist indoctrination and accusing the education ministry of practicing North Korean brainwashing techniques. I shit you not. Never underestimate the power of «moral panic» marketing.

In general, I wonder whether mass-market publishing or education figures larger in the group’s bottom line. AE and a couple of other subsidiaries are listed, but the Group is not.

According to the Web site of the Editora Brazil, the magazine publishing arm of the business produces 192 million copies of 52 titles a year, with 28 million readers and 5 million subscribers.  If you are not planning to read it, please deposit in the proper recycling bin …

The two flagship educational houses, Àtica e Scipione, sold 53.2 million books to the public sector and 6.5 million to the private sector in 2011, according to company financials.

Bovespa 750 | Priming the Pump

Source: Infomoney, via Fusões & Aquisições.

The story is essentially a Ctl-C Ctl-V of prepared talking points from its principal source – a source worth paying attention to, however.

The listing of more and more small and medium enterprises could help BM&F-Bovespa improve its ranking from 26th position currently — one place below the Mongolian Stock Exchange.

BM&F-Bovespa currently lists 353 companies, which makes the Brazilian stock market the 26th largest in the world. The market’s own estimates suggest that a number of companies are waiting for the best moment in which to launch their IPO, but it is not impossible to assume that small and medium enterprises — SMEs — are also waiting for the right moment to list their shares.

The creation of a healthy capital market is a practical necesssity for the growth of a capitalist economy. It was to promotion of these conditions that PAC-PME — a growth acceleration program for SMEs — has been dedicated, in an effort to create the dynamic conditions necesary to economic growth.

The movement, subscribed by such heavy hitters as Itaú Unibanco (ITUB4), Bradesco (BBDC4), Banco do Brasil (BBAS3), BTG Pactual (BBTG11), FIESP , MBC (Movimento Brasil Competitivo), PwC and Deloitte, seeks to make it easier for SMEs to list their shares, raise capital, and grow and develop, contributing to economic growth in general.

“Bovespa could have 750 listed companies and cease to be a pitiful exchange. Currently, we are the 7th largest economy in the world, but our exchange occupies 26th place, with only 353 listed companies. Access to the capital markets is completely out of reach [to many companies],”says Rodolfo Zabisky, CEO of @ttitude, the largest independent investor relations company in the world.

@ttitude is the parent company of The MZ Group — a S. Paulo-based international IR agency with a near monopoly on multilingual IR services, from 10-Ks and 13-Ds to ADRs and Material Events. 

Water & Sewer | Drop by Drop

Source: Brasil Econômico.

Brazilian private-sector water and sewer companies plan to increase  their stake in the sector by entering into public-private partnerships.

An ugly duckling among infrastructure projects, sanitation is nevertheless being targeted by the private sector, which intends to elevate its share of the market from 10% currently to 40% in ten years.

Private sector sanitation companies made considerable progress in  2012 with the signing of 10 water and sewer contracts in 21 cities, with a total investment of R$1.23 billion — up 140% from 2011.

In the current scenario, the private sector holds 227 sanitation contracts in 250 cities, and has committed to R$ 16 billion in investments over the life of the contracts, according to statistics provided by ABCON [ ... an industry association for private concessionaires in the sector.]

F&A | Ruy Moura’s Breakfast Reading

It has always surprised me that Brazil’s gargantuan and complex business ecosystem   seems unable to produce something along the lines of Dealb%k — an exemplary use of that in-the-moment blog format that keeps readers checking in periodically throughout the day, rather than simply reading it once through and lining the parakeet page with the leftovers.

The business pages of the major Brazilian dailies are heavy on macroeconmic trends, market movements, and the like — stuff you can cover sitting on your ass in front of a Bloomberg Box —  but very light on hard business stories with real protagonists and consequences: Company X overcomes Problem A to accomplish Objective 1.1, or Bank C offers Subsidiary Z to Company Y for X gazillions.

Only the largest economic groups and deals get such coverage, which is not much use to the venture cap, hedge fund or M&A guys who fish a smaller pond — and whose activities are newsworthy themselves, to boot.

So, then, a Brazilian Dealb%k?

The plain old Blogspot Fusões & Aquisições is a step in the right direction, although I  wish it would publish a masthead and take itself seriously as a journalistic source.

Its principal analyst — its only analyst, it seems — appears to be Ruy Moura, founder of Acquisitions Consultora Empresarial Ltda.

Moura’s daily clipping file has climbed to the top of my breakfast reading list, along with the planning ministry’s clipping of various media sources, broken down by topic and searchable.

I think there is a substantial editorial market for the Dealb%k style of coverage.

The only potential competitor I can think of in the Brazilian editorial market is Relatório Reservado, a one-page tip sheet circulating daily to a private circle of subscribers and relying heavily on market rumors.

Exame magazine has a deal flow blog that is useful to check in on as well.

This is the sort of story I find myself missing: