Eike Rolls Out Jumbo PE Fund

Eike Batista, the Brazilian entrepreneur, says he is moving ahead full steam with plans to create an infrastructure-focused private equity fund worth up to $10bn. “We want to establish this fund to invest in the projects tied to the companies of [Batista holding company] EBX,” he tells LatinFinance in an exclusive interview. This would imply a focus on logistics, mining, oil and gas, and power generation. “MPX could execute many more projects if it had access to more funding,” Batista adds, referring to his power generation unity MPX, which went public in December of 2007. The Equity Growth Fund, as it will be called, already counts on the support of China Investment Corporation, a sovereign wealth fund, as well as Brazil’s Banco Itau, says the executive. Batista says pension funds in North America and Europe, and other sovereign wealth funds, could make up the bulk of his PE vehicle’s remaining limited partners. “Things are so bad that many investors today are settling for returns of 3%-4%,” says the billionaire. “But in Brazil you have projects that can yield 10%-15% on a non-leveraged basis,” he adds. Batista says that the investment rationale for the fund, its structure and target returns are still being finalized. A typical “2 and 20” fee structure or similar might be employed, says the executive, referring to the practice of charging a management fee of 2% on net asset value and 20% fee on profit. EBX executives hired especially for the job will manage the fund. Batista says he has already tapped 4 directors, but declines to specify names. Among them are Otavio Lazcano, former CFO of CSN who left his Sao Paulo-based post earlier this month, and former Terna executive Giovanni Giovanelli, according to local rumors.