“Some analysts have described it as the worst investment in the group’s history,” Quinenco’s president wrote in a report
WP BLOOMBERG – The family Luksicthe richest in South America, with a total wealth of around 25 billion dollars (around 123 billion R$), is reaping the fruits of a bet on global shipping and port logistics, having entered the largest sector for the first time a decade later.
An initial investment in 2011 by your holding company Quinenco at the Chilean shipping company South American steam companyOR CSAV, was met with skepticism by analysts and investors after initially posting steep losses. The family stepped in to make more than half of a $1.2 billion capital raise in 2012, and executives had to negotiate waivers with banks and bondholders to part with its fleet of tugboats.
Quinenco has progressively increased its stake in CSAV, which reached a deal in 2014 to merge its operations with Hamburg-based Hapag-Lloyd. CSAV now owns 30% of the world’s fifth-largest freight forwarder, and the industry’s pandemic-fueled bonanza of clogged supply chains and rising freight rates has paid off handsomely.
“Some analysts have described it as the worst investment in the group’s history,” President Andronico Mariano Luksic Craig wrote in Quinenco’s 2022 annual report. “The first few years were indeed quite difficult. Subsequent capital increases and years of losses, as well as a decade without dividends, did not diminish our belief that long-term results would be achieved. And so it was.”
In 2022, Hapag-Lloyd made almost 17 billion euros in profits on 34.5 billion euros in revenues. This led to a dividend of 63 euros per share, or 11 billion euros, approved at the annual general meeting in May.
CSAV made a profit of $5.6 billion last year, mainly thanks to its stake in the shipping giant. Quinenco’s share of these profits represented more than 90% of its net profit for the period and 81% of its dividends, the annual report shows.
The complex holdings of the Luksics family
The Luksics’ holdings are complex: the family owns 83%. Quinencowhich in turn holds 66.5%. CSAVwhich holds 30% of Hapag-Lloyd – but it is clear that the investment in maritime transport has been fruitful. Since CSAV merged with Hapag-Lloyd in 2014, Quinenco has generated a 322% return, including dividends, compared to a 60% gain for Chile’s local stock index.
The family, which also controls copper mining company Antofagasta, has seen its fortune nearly double over the past five years, according to the Bloomberg Billionaires Index, fueled largely by windfall profits from shipping.
They join other global shipping barons – from the Saades to Gianluigi Aponte – who have benefited from expansion and high shipping rates during the pandemic. That wealth is now providing a cushion as rates fall from their highs and a glut of new ships roll off production lines.
This year Quinenco-controlled SM SAAM SA, which operates in the tugboat and air cargo industry, completed the sale of about $1 billion in port assets to Hapag-Lloyd.
Quinenco was founded in 1957 by patriarch Andronico Luksic Abaroa as a company producing wooden supports for underground tunnels. It has since diversified into finance, beverages, copper cables, fuel and logistics.
It operates a joint venture with Citigroup to control Banco de Chile and has a partnership with Heineken for its beer, wine and bottling operations in Latin America under the Cia Cervecerias Unidas company. It also owns a nearly 30% stake in French energy company Nexans and operates service stations in Chile, the United States and Paraguay.
The Luksic family’s biggest asset is its $12 billion stake in Antofagasta. After Andronico’s death in 2005, his sons Andronico, Guillermo and Jean-Paul took over various parts of the company.
Today Andronico, 69 years old, is president of Quinenco and Jean-Paul, 59 years old, is president of Antofagasta. Guillermo, who was actively involved in the business, died in 2013./ With Bloomberg’s Jack Witzig
Source: Terra
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