Interviews | May 30, 2016 at 10:45 pm

On Argentine Business and Economy: Interview with Eduardo Elsztain

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Eduardo_ElsztainOne of the most prominent Argentine businessman today, Eduardo Elsztain is president and largest shareholder of Argentina’s largest real estate company, Inversiones y Representaciones S.A, and he is chairman of Argentina’s leading mortgage bank, Banco Hipotecario. Elsztain’s business acumen allowed him to head an agricultural company called Cresud through the Argentine currency crash of 2001 and into the new economic period. Mauricio Macri, Argentina’s new president, is undertaking measures to repay the country’s financial debt with holdout companies, which has allowed the country to reinsert itself into the international economy.

Harvard Political Review: For an Argentine businessman, what does the return of your country to the international bond market after the accord with the holdouts represent?

Eduardo Elsztain: It is a great notice and one that is already having positive effects. We were the first Argentine business to show on the market; we placed the sale of a bond for $360 million at an interest rate of 8.7 or 8.8, but the important thing is that we received offers for about three times higher than what we asked. The national government has also placed $15 million in bonds these days, with an offer that tripled the original amount and an even lower interest rate. We could have taken the sum that was offered to us, but we were sure that the interest rate was going to be lower and so we postponed the decision. I think that in the near future, we will further approach the interest rates that neighboring countries pay, which is a direct effect from our return to the international bond market.

HPR: In what sectors of the Argentine economy can one expect foreign investment?

EE: After a large boom in investments in financial assets, the world, I believe, is looking for real and tangible assets. Gold cannot be printed, bricks cannot be printed, hydrocarbons cannot be printed, acres and agricultural products cannot be printed. I think those are the sectors that will probably attract foreign investment.

HPR: What are Argentina’s expectations in the global economy?

EE: The best. We have what the world demands: foods. The agricultural sector is one of the more dynamic and efficient ones in Argentina and, as soon as the economic obstacles that have so often prevented its growth are lifted, we will be able to compete in sectors that we once lost, such as the export market of products derived from beef. Without a doubt, we need to add value to all the production destined for exports, and we can do it. I also see a good future for the manufactured products of industrial origin.

HPR: How will the agreement settled with the holdouts affect other provinces outside of Buenos Aires?

EE: The regional economies have been faltering due to the application of policies that complicated production and sales to the external market. This was especially noticeable in the agricultural business. The return of Argentina to the bond and international markets in addition to the government’s policies regarding production of cereals and meat will have a very positive impact in those regional economies.

HPR: You have invested about $460 million in projects having to do with the construction of offices, houses, and shopping centers. What conditions have allowed you to make these types of investments now and not in earlier years?

EE: Our group has never stopped investing. In fact, we come from a steady rhythm of opening or expanding a shopping center per year. We have not invested just yet: we are going to invest that amount in the next 36 months, and this includes works that have begun or concluded throughout this period. We see a great demand in shopping centers as in “Premium” style offices. In Alto Palermo, we have had a waiting list to lease spaces for years. In the offices that we will build next to the Dot Baires shopping mall, we have offers for us to rent entire buildings for long periods of time, and in Catalinas we have already sold four floors even before having commenced their actual construction. I would also include the purchase that our group, Banco Hipotecario, has just made: in a public offering we acquired the emblematic building of Mercado del Plata, a few meters away from the Obelisk. We will pay $68,114,000, but the important thing is not only this investment, but the transparency of the procedure. We were three business groups working openly and able to be seen by everyone. Actions like this one, a purchase of a public asset in an environment of transparency and liberty, also encourage the arrival of further investments. These things, like not having indications of what a business can or cannot do, are extremely clear examples that Argentina is experiencing a different business climate, one that is more optimistic, more hopeful.

HPR: As an Argentine citizen, how do you hope to contribute in this new economic period?

EE: The obligation, the mission of a businessman, is to invest and create jobs, and that is exactly what we are doing.

This interview has been edited.

Image source: Wikimedia commons/Thaidigsmann

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