BRAVO: Investor of the Year-Alex Behring, Co-Founder and Managing Partner 3G Capital

Photo: Ben Fink Shapiro

Alex Behring
Veteran investor aims to turn around Burger King

SÃO PAULO — Alexandre Behring is one of the most prominent representatives of a new generation of aggressive financial investors and managers of consumer-oriented services. At 44, he already stands as a veteran private equity manager in Brazil after learning the ropes on a team led by billionaire Jorge Paulo Lemann at GP Investimentos, and later at 3G Capital.
Seven years ago, Behring left provincial Curitiba, in southern Brazil, where he piloted a struggling railway toward a successful IPO, and headed toward New York to help Lemann and others found 3G Capital. There, Alexandre simply became “Alex.” Soon, 3G Capital allied itself with the activist Childen’s Investment Fund in 2008 to buy a chunk of the U.S. railway CSX, of which Behring was appointed director.
Behring then became the main negotiator behind the surprise deal to buy out Burger King in late 2010.
“Burger King was a perfect target for 3G Capital, which has a strong experience in retail and consumer brands,” he says, referring to the list of companies that had been conquered since the days of GP Investimentos, including Ambev, the brewer that led to the creation the global AB Inbev empire, and Lojas Americanas, a household name in non-food retailing in Brazil.
Behring sees some similarities between the Latin American railway he helped turn around and the U.S.-headquartered fast-food chain. “They are very different industries, but both have very significant growth opportunities ahead of them. This is what we liked,” he explains. “They are good businesses that can grow for an extended period of time. So we decided to invest our capital, work on the potential to improve operations and to grow.”
But a turnaround for Burger King could take a while. “It’s still very early days in the Burger King investment. We feel there are important things to do to try and make Burger King more efficient,” says Behring, who is leading the way as chairman. He insists that the chain should “operate in a lean way” in order to improve the franchise worldwide.
The U.S. market is one area of concern.
“We have sought to improve our relationships with franchisees in the U.S. We have used a very upfront approach,” Behring says. He cites the hiring of Steve Wiborg, the former president and CEO of Heartland Food Corp., one of Burger King’s largest franchise operators, who brought 20 years of experience to the position of president of North America operations.
Other appointments have proved short-lived. Greg Ryan, a former McDonald’s franchise owner in Brazil, was made president of Latin America and the Caribbean, only to be replaced a few months later by José Tomas, the top human resources officer who has been with Burger King since 2004.
3G Capital had surprised the industry and markets with its $4 billion (including debt) takeover offer for Burger King, yet Behring thinks it was money well spent. “We paid a fair price for Burger King. We financed the deal in very fair terms,” he says. “We have already seen some initial improvement, which will hopefully make it a very attractive business. We are only in the second year, and things are improving very fast.”
In the second quarter of 2011, Burger King’s net income and revenues were still down, by 14.4 percent and 4 percent, respectively, compared with the same period in 2010, but the company also reported net adjusted EBITDA of $150.6 million, an improvement of 29 percent.
The Latin America region registered the strongest growth in comparable sales, up 6.8 percent in the second quarter, but Behring sounds a cautious note. “Latin America is one of the top three largest growth opportunities, alongside Asia and Russia/Eastern Europe,” he says.
Burger King has a strong presence in Mexico, its largest market in the region, as well as Central America, but the fast-food chain is trying to beef up its presence in South America. Key deals have been secured in Brazil with BR Partners, in April, and with financial investors Vinci Partners, in June.
“Vinci is a good example of how we can address the market,” Behring says. “The company made $400 million available to the joint venture with Vinci. We currently have around 100 restaurants in the country [Brazil]; we could have a lot more — many multiples of that.”
On Wall Street, Alex Behring is not just another kid on the block. Being Brazilian in a crisis environment can be a plus, he reckons. “We grew up in Brazil. For decades we have had a very volatile environment,” he says. “This experience may prove fundamental.
“The global economic crisis is not helpful to any business, but Burger King is part of one of the most resilient and least cyclical businesses. When there is a crisis atmosphere, there is a lot of pessimism in the air, and it is an opportunity to focus on reasonably attractive businesses.”

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