Mubadala Capital, based in Abu Dhabi, plans to invest $13.5bn over the next decade on a large biofuels project. This is part of larger plans for Brazil that also include the creation a new stock market.
Asset management of the Emirati sovereign fund, which manages the funds’ assets, is increasing its stakes in Latin America’s biggest economy. Its holdings range from metro lines, medical universities, to a majority share of the local Burger King owner — along with Donald Trump’s daughter-in-law Jared Kushner.
Mubadala Capital’s head for Brazil, in an interview with the media, revealed the budget of the flagship project to produce renewable aviation kerosene and renewable diesel primarily using non-food plant material.
Acelen’s large-scale project will consist of five modules, each costing $2.7bn. The first module is expected to start production at the end 2026. Each module will include a biorefinery capable of processing 20,000 barrels per day of fuel, infrastructure and areas for growing the input crop.
“It is all about the feedstock, which in reality is agriculture.” Oscar Fahlgren said that Brazil was probably the most suited country in the world for agricultural expertise because of its climate and fertile soil. “Brazil’s agriculture is what Abu Dhabi’s oil is.”
In 2021, the initiative will include the conversion of a refinery that was acquired by Petrobras from the state-controlled state of Bahia in the northeastern part of Brazil. Fahlgren said that a total of $13.5bn will be funded by a combination of equity and debt for a period between five and 10 years.
He added, “This is a very significant capital project.” “I see incredible opportunity to invest in Brazil’s green energy transition.”
The group only revealed the estimated cost of the initial module. Mubadala Capital will expand its bioenergy business in Nigeria, building on $6bn worth of investments made by the company there. This represents a quarter the group’s total global portfolio.
Mubadala, the parent company, invests the remaining two-thirds in Brazil. The company focuses on complex or distressed businesses.
The sovereign fund, which bears the same name, first invested in the South American country in 2012 by backing the former tycoon Eike Bátista. He was once among the wealthiest men on the planet before his energy and commodities empire collapsed the following year.
Mubadala became the largest creditor to Batista’s holding company EBX, and acquired several of Batista’s assets, such as stakes in mines and ports.
Currently, its portfolio includes an organization that organizes the Sao Paolo Formula 1 Grand Prix. Fahlgren described Mubadala’s approach to the country as “contrarian”, having remained in the country through economic and political crisis in the last decade.
He said, “We have invested heavily in Brazil for over 10 years in an environment that has seen most foreign investors shy away.”
Mubadala Capital has fully invested in its second Brazil fund, which closed last year with $710mn in commitments. Americas Trading Group hopes to open its Brazilian bourse next year, to compete with the incumbent B3 in Sao Paulo.
“Brazil has a large population. There is only one stock market in Brazil. “I think this is a suboptimal setup for players in this market,” Fahlgren said. It will likely be a phased launch – perhaps starting with equity, and then expanding. “No asset class is off limits.”
Zamp is another focus, as it franchises Burger King in Brazil. Mubadala Capital steadily increased their stake to 58 percent and elected recently a majority on the board. This includes an executive of Affinity Partners. The private equity firm that Jared Kushner runs. The New York Times was the first to report Affinity Partners’ investment.
Fahlgren stated that he was “very pleased” with Affinity’s partnership. He said, “It happened, and we don’t have any other specific investments planned. But I wouldn’t rule out the possibility.”
Mubadala Capital has also been involved in discussions for a proposed new Football League , whose aim is to package and sell the rights.
Fahlgren said, “We are very bullish about the current investment climate in Brazil and the opportunities that we see.” He added, “We have assets that are mature and may be exit candidates not too far in the future.”