Batista Closing Gap on Slim With OSX Sale: Week Ahead (Update1)

March 12 (Bloomberg) -- Eike Batista’s plan to raise $5.6 billion in the biggest initial public offering this year moves him one step closer to fulfilling his ambition of being the world’s richest man.

Batista rose to the top 10 of Forbes magazine’s billionaires list this week for the first time as his fortune soared to $27 billion. Selling shares of shipbuilder OSX Brasil SA at the high end of the estimated price next week would push his net worth up by $6.1 billion, according to Bloomberg calculations.

The 53-year-old Brazilian entrepreneur said last month his worth may increase to $100 billion in the next decade after telling Exame magazine in 2008 “my goal is to be the world’s richest man in five years.” Batista has raised a total of 9.9 billion reais ($5.61 billion) in three public offerings since the start of 2006, according to exchange owner BM&FBovespa SA. Those companies now have a total value of about 65.6 billion reais ($37.2 billion).

“He’s an egomaniac,” said David Fleischer, a political science professor at the federal University of Brasilia. “He has a mania for being the richest man in the world.”

The OSX offering furthers Batista’s strategy of building wealth by luring investors to his oil, mining and energy companies. Rio de Janeiro-based OSX may raise as much as 9.92 billion reais in a sale of up to 48 percent of the company. OSX plans to sell at least 5.5 million new shares and may offer as many as 7.4 million.

Brazilian IPOs

All three Brazilian IPOs this year have raised less than the companies sought. Batista must convince investors to buy a company that has had two years of losses and whose main assets are 3.2 million square meters of oceanfront property in the Brazilian state of Santa Catarina and the guarantee of orders from Batista’s oil company, OGX Petroleo & Gas Participacoes SA.

Batista declined to comment for this story, said an official at his company who asked not to be identified. Batista owns 100 percent of OSX and doesn’t plan to sell his shares, according to a company filing. The sale is expected to be priced on March 17.

The share sale would top the world’s two largest IPOs this year after United Co. Rusal raised HK$17.39 billion ($2.24 billion) in January and Huatai Securities Co. sold 15.69 billion yuan ($2.3 billion) of stock last month. It would be Brazil’s biggest sale since Banco Santander Brasil SA raised a record 12.3 billion reais in October. Dai-ichi Mutual Life Insurance Co. plans to raise about 1.1 trillion yen ($12 billion) next week. Dai-ichi is expected to be priced on March 19.

Growing Wealth

Batista has more than tripled his wealth in the past year. The son of a former chief executive officer of mining giant Vale SA, he debuted on Forbes’s list in 2008 at 142nd place with $6.6 billion. That year he spun off LLX Logistica SA from iron-ore miner MMX Mineracao & Metalicos SA. He also raised 6.7 billion reais in the IPO of OGX Petroleo, a record at the time in Brazil.

In 2009, he jumped to 61st place with $7.5 billion. Last year, LLX and MMX were the leading gainers on the Bovespa index.

“He’s had great timing and a little bit of good luck,” Luisa Kroll, a senior editor at Forbes, said in an interview.

Batista is now ranked by Forbes as the world’s eighth- richest person. Forbes declined to say how it arrived at the $27 billion figure. The list is a “snapshot of wealth taken on Feb. 12,” according to Forbes.com.

The stakes Batista has in his four public companies are worth $25.2 billion, based on yesterday’s closing prices. Should OSX sell shares at the high end of the 1000-to-1333.33 reais range, Batista’s 8.1 million shares would boost his worth by $6.1 billion.

Taking Risks

That doesn’t count the value of a restaurant and a medical center he owns in Rio de Janeiro and 240,000 hectares (593,000 acres) of land he owns in Chile. It also allows him to close the gap with the top three men on the Forbes list: Carlos Slim, Bill Gates and Warren Buffett.

“I think big, and I’m not afraid to take risks -- even if I’m alone,” Batista said in a 2008 interview in his Rio de Janeiro office.

With OGX, Batista has created a company that has a value of 58 billion reais even though it hasn’t begun commercial production of oil. The shares have climbed 57 percent since its 2008 listing. OGX is ranked as the most expensive company in Latin America, trading at 456 times analysts’ earnings estimates for this year, data compiled by Bloomberg shows.

OGX, which yesterday reported profit of 10.8 million reais in 2009, said today it discovered the presence of hydrocarbons at a well in Brazil’s Campos Basin.

OSX’s Plans

LLX has surged 89 percent since listing on plans to build ports in southeastern Brazil. MPX Energia SA, which raised 2 billion reais in its 2007 IPO, hasn’t completed construction of any of the power plants.

OSX plans to use the sale proceeds to build oil platforms and a shipyard. The company last year reported a net loss of 33.4 million reais. Losses narrowed from 57.7 million reais in 2008.

Aquico Wen, who manages the $1 billion Legg Mason Emerging Markets Equity Fund at Esemplia Emerging Markets in London, said investors should be skeptical of Batista’s offering.

“We see this as disguised transfer of wealth from OGX to Batista,” Wen said in an e-mail. “How can a company with virtually no assets be worth billions of dollars without Batista contributing any major assets or money other than the contracts from OGX?”

OSX last month signed an agreement with OGX to provide floating production storage and offloading platforms. His deals show Batista’s determination, said Luiz Cezar Fernandes, CEO of Marambaia Group, a Petropolis-based company with stakes in technology and agriculture.

“When he first said he wanted to be the richest man in Brazil some people even laughed,” Fernandes said. “He’s shown that what he promises, he delivers.”

To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; Alexander Ragir in Medellin at aragir@bloomberg.net