The richest family in South America gets even richer thanks to ships

In 2011 the investment made by the holding Quiñenco SA It aroused some disbelief in the business world. However, time returned and the Luksics were right. South America’s wealthiest family is reaping the benefits of a bet on global shipping and port logistics more than a decade after first entering the industry. Currently, the Luksic family accumulates a combined fortune of close to US$25 billion.

An initial investment in 2011 by its holding company Quiñenco SA in Chilean shipping company Compañía Sud Americana de Vapores SA, or CSAV, was met with skepticism by analysts and investors after initially posting heavy losses. The family stepped in to provide more than half of a $1.2 billion capital raise in 2012, and executives had to negotiate waivers with banks and bondholders to spin off its tugboat fleet.

Quiñenco progressively increased its stake in CSAV, which reached an agreement in 2014 to merge its operations with Hamburg-based Hapag-Lloyd. CSAV now owns 30% of the world’s fifth-largest shipping company, and the boom in the industry that came with the pandemic due to bottlenecks in supply chains and rising freight rates has paid off big.

“When in 2011 Quiñenco took ownership of Compañía Sud Americana de Vapores, for example, the market resented the decision and some analysts went so far as to write that it was the worst investment in the history of the group,” wrote the president, Andrónico Mariano Luksic Craig. , in Quiñenco’s annual report in 2022. “Of course, the first years were very hard. Successive capital increases and years of losses, a decade without distributing dividends, did not discourage our conviction that results would come in the long term. So it was”.

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In 2022, Hapag-Lloyd made almost 17 billion euros ($18 billion) in profits on 34.5 billion euros in revenue. That led to a dividend of 63 euros per share, or 11 billion euros, approved at the annual general meeting in May.

Last year, CSAV made $5.6 billion in profits, mainly from its stake in the shipping giant. Quiñenco’s share of those profits represented more than 90% of its net income in the period and 81% of dividends, according to the annual report.

The Luksic holdings are complex—the family owns 83% of Quiñenco, which, in turn, owns 66.5% of CSAV, which owns 30% of Hapag-Lloyd—but it is clear that the shipping bet has been fruitful. Since CSAV merged with Hapag-Lloyd in 2014, Quiñenco has generated a return of 322%, including dividends, compared to a 60% increase in the Chilean stock index.

Family fortune

The fortune of the family, which also controls copper miner Antofagasta Plc., has nearly doubled in the past five years, according to the Bloomberg Billionaires Index, thanks in large part to profits from the shipping business.

The Luksics join other global shipping magnates — from the Saades to Gianluigi Aponte — who have benefited from high shipping rates during the pandemic. That wealth now serves as a cushion as rates fall from their peaks and a host of new ships roll off production lines.

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This year, SM SAAM SA, controlled by Quiñenco and which has tugboat and air cargo operations, closed the sale of around US$1 billion in port assets to Hapag-Lloyd.

Quiñenco was founded in 1957 by patriarch Andrónico Luksic Abaroa as a company that manufactured wooden props for underground tunnels. It has since diversified into finance, beverages, copper cables, fuel and logistics.

The company operates a joint venture with Citigroup Inc. to control Banco de Chile and has a partnership with Heineken NV for its beer, wine and bottling business in Latin America under Compañía de Cervecerías Unidas SA. It also owns a nearly 30% stake in French energy company Nexans SA and operates fuel stations in Chile, the United States and Paraguay.

The Luksic family’s largest asset is its US$12 billion stake in Antofagasta.

After Andronico’s death in 2005, his sons Andronico, Guillermo and Jean-Paul took over different parts of the business.

Today, Andrónico, 69, is president of Quiñenco and Jean-Paul, 59, is president of Antofagasta. Guillermo, who was actively involved in business, died in 2013.

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