At Brazilian real-estate company MRV Engenharia & Participacoes SA, electric fans whir in some of the rooms in its gray, low-slung building, saving the cost of air conditioning. That’s typical of Rubens Menin Teixeira de Souza’s approach to the business he founded in 1979 – and which has since vaulted him into the ranks of the world’s billionaires, with an estimated net worth of at least $1.6 billion, Bloomberg Markets magazine reports in its September cover package: “Hidden Billionaires.”
While other homebuilders targeted wealthy Brazilians, Menin began by selling to the lowest earners – the nation’s bricklayers and housekeepers, as he describes them. He provided loans to his own clients and trimmed costs by designing just a few standard models.
MRV, based in Belo Horizonte, a city of 2.4 million that forms Brazil’s industrial triangle with Rio de Janeiro and Sao Paulo, is today the nation’s No 5 homebuilder.
“We’re very Spartan at this company; it’s part of our DNA,” says Menin, 55, who is MRV’s chairman and chief executive officer.
MRV is riding the surge of Brazil’s middle class. At least 36 million people in the country of 190 million have risen from poverty since 2003, President Dilma Rousseff said on June 6.
MRV’s revenue soared more than 31-fold from 2005 to 3 billion reais ($1.9bn) last year, while profit jumped 26-fold to 634.5million reais. Menin’s 152.4 million MRV shares – 31.6 percent of the company – were valued at 1.7 billion reais on August 1. The stock was up 32 percent since the company’s July 2007 initial offering on that date. Menin, taking advantage of the rise, shed 22.5 million shares in two sales totalling 329.2 million reais before taxes. He also sold an undisclosed number in July 2007. He’s got 64.5 million reais in dividends and says he has $500 million in assets outside of MRV stock, and no personal debt.
MRV expects to benefit from a 2009 low-income housing initiative that enables families earning 5 000 reais or less a month to buy a home at an interest rate as low as 5 percent. That compares with about 47 percent on average for consumer loans. Menin advises on the programme, under which the government agreed to provide loans for 79 percent of MRV’s 47 000 new projects last year. “This is very important for our country,” Menin says, seated in his sun-drenched living room.
Menin, who like his parents and grandfather studied engineering, saw the possibilities in low-cost housing when he was an 18-year-old intern supervising construction in poor areas. After graduating from the Federal University of Minas Gerais, a local public university, he and two cousins started MRV with $100 000 in savings and $30 000 in loans from their parents.
Competitors went under or abandoned low-income projects during the debt crisis in the early 1980s, when inflation soared, reaching more than 6 800 percent by 1990. MRV refrained from distributing profits to partners to keep growing.
With the end of hyperinflation in the mid-1990s, Menin expanded outside Belo Horizonte. He started a small lender in 1994 called Banco Intermedium.
In 2002, he formed a rental housing company in Miami named MIC MRV International and then founded MRV Logistica & Participacoes SA to build warehouses and business parks in 2008.
MRV’s mainstay apartments are simple residences – a two-bedroom unit is about 46m2 – in gated complexes with swimming pools and playgrounds.
They’re a step up from the urban dwellings of much of Brazil’s poor: violent shanty-towns known as favelas where houses made of cinder block and corrugated zinc crawl precariously up steep hills.
“When you take a kid from the favela, an unhealthy place, and he moves to an apartment complex, he ends up having better health, better hygiene, better education,” Menin says. Menin’s own apartment is a lavish 20th-floor triplex. A zebra-skin rug covers a marble floor, and a terrace with a hot tub overlooks Belo Horizonte’s hills.
While Brazil’s economic growth is slowing – to 4 percent this year from 7.5 percent in 2010 – Menin is not concerned. The country’s young population ensures that demand for housing will outpace supply, he says. – Bloomberg