Demagogues rant, civilisations totter – while others, blithely indifferent, attempt US$143 billion takeover deals. And some of them are private equity players. If any buyout firms at all were involved in Kraft Heinz Co's failed super-bid for Unilever, you might have expected them to be the incumbent Wall Street buyout giants of KKR, Carlyle, TPG, Apollo, and their ilk. After all, it was KKR who defined modern perceptions of the megadeal with its pursuit of another consumer transaction: RJR Nabisco. And the sheer magnitude of the Unilever bid is the kind of figure that would make even seasoned buyout veterans gasp. Yet this time around, a completely different abbreviation is involved: 3G Capital.
Different in more ways than one. For one thing, 3G, which describes itself as “a global investment firm focused on long-term value, with a particular emphasis on maximising the potential of brands and businesses,” has dual headquarters in New York and Rio. The firm’s DNA is Brazilian - put together in 2004 by Brazilian billionaires Jorge Paulo Lemann, Carlos Alberto Sicupira, Marcel Herrmann Telles and Roberto Thompson Motta. And you can gauge their ambitions and self-confidence by their partnership with Warren Buffett’s Berkshire Hathaway on deals, and simply by the scale of the Unilever bid. 3G’s 2015 merger between Kraft Foods H.J. Heinz Holding Corp created “the third-largest food and beverage company in North America and the fifth-largest food and beverage company in the world,” and Reuters estimates the current value of the 3G consumer empire at $140 billion.
What’s perhaps most significant about 3G is not its sheer scale but the fact that it presents a new kind of rival for the American buyout kings, whose peers and sometime competitors from outside the West have by and large been state-connected entities, like Singapore’s Temasek Holdings. 3G, in contrast, appears to not be able to do deals on the same scale as the Wall Street titans, but also on the same commercial basis, with plenty of debt to leverage its targets, and plenty of aggressive cost-cutting and maximisation of synergies after acquisition. It also brings Latin America definitively onto the global private equity stage, not only as a source of emerging market investment opportunities, but also of emerging buyout giants. The Financial Times has reported that even after the failure of the run at Unilever, 3G has $15 billion in hand for its next bolt-on acquisition.
Whether or not America is seeing the wane of its global predominance, new and purely commercial competitors from abroad appear to be rising up to challenge their Wall Street buyout counterparts.