Mubadala plans to invest $1 billion annually in Brazil

The fund recently closed a second Brazil-specific fund of more than $710 million, and is expected to start another fund as early as 2024.

Bloomberg


October 10, 2023 at 3:10 pm – Updated 2 hours ago

Mubadala Capital, the investment arm of Abu Dhabi’s sovereign wealth fund, is optimistic about Brazil’s growth prospects under President Luiz Inacio Lula da Silva, and plans to invest more than US$1 billion annually to expand its holdings in the country, which range from an oil refinery to a toll road.

More than a decade after it came to Brazil to invest in the commodities empire owned by then-billionaire Ike Batista, the company has invested more than $5 billion in the country, Oscar Wallgren, head of Mubadala Capital in Brazil, said in an interview. He said Brazil’s size and return potential make it the most attractive location in South America.

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He said, “Gross domestic product is growing more than expected, and we have witnessed political stability since the new government took office.” “The climate in the international community favors Brazil, and ultimately, this is a beneficial environment to be in.”

The manager has just closed a second Brazil-specific fund with more than US$710 million, more than double the first fund, and should start raising capital for a larger fund in 2024, Wallgren added.

Mubadala Financial Investments manages US$20 billion, about two-thirds of which comes from external investors. He continues to search for opportunities in the country. On the manager’s radar are capital-strapped companies, a new stock exchange to compete with B3 and even the creation of a new soccer league in Brazil.

The UAE’s joining BRICS is likely to increase capital flows among member states, the executive said, adding that turmoil in the rest of the world makes Brazil a more attractive investment destination.

Mubadala Financial Investments focused on distressed assets with attractive valuations that could be turned around. Its portfolio includes a toll highway in São Paulo state and ethanol producer Atvos, both acquired along with Novonor, Odebrecht’s former company.

The group also owns Acelen, a company it created to operate an oil refinery acquired from Petrobras in Bahia. Wallgren said that Mubadala Capital and Petrobras recently signed an agreement to study the biofuel unit at the Matarebe refinery to produce renewable diesel and jet fuel, which could become one of the largest producers of renewable fuel on the planet.

Some authorities asked Petrobras, which pursues a policy of protecting consumers from short-term fluctuations in fuel prices, to buy back the Matarebe refinery. Wallgren declined to comment on whether negotiations were continuing.

“We are an international investment company. In principle, we will always have a conversation with all of our assets if it makes sense for our investors and for us as a company.

In green energy, Mubadala Financial Investments is also expanding production at Atvos and is exploring adding other biofuels, including sustainable jet fuel, to its existing portfolio.

He added: “We have brought the company out of the judicial recovery phase, unlocked its growth potential, and we are investing heavily in expansion.”

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