Shell’s Brazilian ethanol JV raises USD 1.2bn in IPO to fund growth

Sugarcane harvesting in Brazil

August 6 (Renewables Now) - The initial public offering (IPO) of Raizen SA should accelerate the joint venture’s (JV) growth, Royal Dutch Shell Plc (AMS:RDSA) said on Thursday as Raizen shares started trading on the Sao Paulo Stock Exchange.

Raizen, a large sugarcane ethanol producer, is a JV between Shell and Brazil’s Cosan SA (BVMF:CSAN3). It has raised BRL 6 billion (USD 1.16bn/EUR 983m) in an IPO, offering some 810.8 million preference shares at BRL 7.40, to fund growth.

Examples illustrating Raizen’s growth strategy include its February agreement to acquire Brazilian ethanol producer Biosev. There was also recently an investment decision on a new second-generation biofuels plant that will expand Raizen’s current annual cellulosic ethanol production capacity of 38 million litres by 82 million litres.

“Shell is committed to Raizen as we grow our renewable energy business and our presence in Brazil and Argentina,” according to Shell’s downstream director Huibert Vigeveno.

Shell said that growing Raizen will contribute to its goal of achieving net-zero emissions by 2050.

Shell and Cosan will each have an equity stake of around 43.5% in Raizen after the IPO, subject to an over-allotment option being exercised and completion of the Biosev acquisition. The partners will continue to hold 50% of the ordinary voting stock.

(BRL 1 = USD 0.194/EUR 0.164)

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Plamena has been a UK-focused reporter for many years. As part of the Renewables Now team she is taking a keen interest in policy moves.

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