Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
Abu Dhabi’s Mubadala Capital plans to invest around $13.5 billion in major biofuel projects in Brazil over the next 10 years, under a wide-ranging plan for the country that includes the creation of a new stock exchange.
The asset management arm of the Emirates sovereign wealth fund is increasing its bets on Latin America’s biggest economy, with holdings ranging from subway lines to medical schools and the Burger King brand alongside Donald Trump’s son. Local owners hold a majority stake in the company. Law, Jared Kushner.
In an interview with the Financial Times, Mubadala Capital’s Brazil representative revealed for the first time the total budget for the company’s flagship project to produce renewable diesel and “sustainable” aviation kerosene using primarily non-edible plant matter. revealed.
The large-scale development by its energy company Acelen will consist of five $2.7 billion “modules,” with the first module expected to enter production by the end of 2026. Each module will consist of a new biorefinery with the capacity to process 20,000 barrels of fuel each. day, associated infrastructure and acreage for growing input crops.
“It’s all about the ingredients.” [which] It’s actually agriculture. And Brazil is probably the best-positioned country on earth in terms of agricultural proficiency, thanks to its climate and fertile soil,” said Oscar Fahlgren. “Brazil is to agriculture what Abu Dhabi is to oil.”
The effort also includes converting an existing refinery in Brazil’s northeastern state of Bahia, which it acquired from state-owned Petrobras in 2021. The estimated total amount of $13.5 billion is expected to be raised in 2021 through a combination of equity and debt. That period is five to 10 years, Fahlgren said.
“This is a very important capital project,” he added. “We see great opportunities to invest in Brazil’s green energy transition sector.”
The group had previously only released estimated costs for the initial modules in development. Mubadala Capital’s bioenergy business builds on a $6 billion investment in the country, representing about a quarter of the group’s global portfolio.
Two-thirds of the capital in Brazil comes from external investors, the rest from parent organization Mubadala. It focuses on companies in complex or difficult situations.
The sovereign wealth fund of the same name first entered the South American country in 2012 with a $2 billion investment backing former tycoon Ake Batista. Batista was once one of the world’s richest men until his energy and commodity empire collapsed the following year.
In the aftermath, Mr. Mubadala became the main creditor of Mr. Batista’s holding group EBX and took ownership of some of his assets, including shares in ports and mines.
The company’s portfolio currently includes the company hosting the São Paulo F1 Grand Prix. Fahlgren described Mubadala’s approach to the country as “contrarian” as it weathered the economic and political crisis of the past decade.
“Over the past decade, we have been very active in investing in Brazil in an environment where most foreign investors have shied away from it,” he said.
Mubadala Capital was fully invested in a second Brazil-focused fund that closed last year with a commitment of $710 million, he added. Americas Trading Group, a financial assets trading platform acquired in 2023, wants to open a stock exchange in Brazil next year to rival the existing B3 in Sao Paulo.
“Brazil is a very big country. There is only one stock exchange. And I think this is an infrastructure that is not optimal for players operating in this segment,” Fahlgren said. “It will probably be launched in stages, probably starting with equities and then expanding. No asset class is off the table.”
Another focus is Zamp, which franchises Burger King restaurants in Brazil. Mubadala Capital has steadily increased its stake to 58% and recently elected a majority of the seats on the board of directors. The board now includes executives from Jared Kushner’s private equity firm, Affinity Partners, which is also a shareholder. Affinity’s investment was first reported by the New York Times.
Fahlgren said he is “very pleased” with the partnership with Affinity. “It just happened and we don’t have any other specific investments planned, but we won’t rule out that possibility,” he added.
Mubadala Capital is also involved in negotiations for a proposed new soccer league in Brazil, with the goal of packaging and selling commercial rights.
“We are very bullish about the current investment environment and opportunities in Brazil,” Fahlgren said. “We currently have a number of relatively mature assets that could be potential exit candidates in the not-too-distant future,” he added.
