Arab News, Mon, May 06, 2024 | Shawwal 27, 1445
UAE’s Mubadala Capital plans $13.5bn investment in Brazil’s biofuel sector
Emirates:
Brazil’s biofuel market is set for substantial growth as UAE’s Mubadala Capital
has committed to invest $13.5 billion over the next decade.
Oscar Fahlgren, head of Brazil strategy at the
sovereign wealth fund, disclosed the budget for the initiative during an
interview with the Financial Times. He divulged the details of the fund’s
plans to produce renewable diesel and sustainable aviation kerosene primarily
utilizing non-food plant matter.
In his interview with the newspaper, Fahlgren said
Mubadala’s Brazilian subsidiary, Acelen, will initiate the development of a
large-scale biofuel project by 2026.
The fund’s executive stated that the funds will be
sourced through a blend of equity and debt over a span of five to 10 years.
The endeavor will encompass five modules, each
valued at $2.7 billion, housing a new biorefinery capable of processing 20,000
barrels of fuel per day. Additionally, it will include the necessary
infrastructure and cultivated acreage to sustain the input crop.
“It’s all about feedstock (which) in reality is
agriculture. And Brazil is probably the best-placed country on the planet when
it comes to agricultural proficiency because of the climate and the fertile
soil,” said Fahlgren, adding, “Brazil is to agriculture what Abu Dhabi is to
oil.”
The project will also include the conversion of an
existing oil refinery in the northeastern Brazilian state of Bahia acquired from
government-owned Petrobras in 2021.
“It’s a very important capital project,”
Fahlgren said. “I see tremendous opportunity to invest in the green energy
transition space in Brazil,” he added.
Mubadala’s venture into bioenergy will leverage
its existing $6 billion investments in the country, constituting approximately a
quarter of the group’s global portfolio.
“We’ve been very active investing in Brazil, for
the past 10-plus years, in an environment where most foreign investors have been
shying away,” Fahlgren said.
Mubadala also plans to open a stock exchange in
Brazil next year through its Americas Trading Group.
“Brazil is a very large country. It has only one
stock exchange. And I think that’s suboptimal infrastructure for the players
that operate in this segment,” said Fahlgren.
“It will probably be a staged launch — perhaps
start with equities, then expand. No asset classes are off the table.”
The asset management arm of the Emirati sovereign
wealth fund is increasing its bets on Latin America’s largest economy, where its
holdings span metro lines and medical universities to a majority stake in the
local owner of the Burger King brand.
“We’re very bullish on the investment climate in
Brazil right now and the opportunities we see,” said Fahlgren. “We do have a
number of assets that are relatively mature today, and could be potential exit
candidates in the not-too-distant future,” he added.