Raizen eyes ethanol plant stake sale amid strategic shift

Brazilian energy firm Raizen SA, a joint venture between Shell Plc and Cosan SA, is reportedly evaluating the sale of a stake in its second-generation (E2G) ethanol plants to raise capital and reduce debt. This move is part of a broader strategy to optimise operations and improve its financial position, reports Bloomberg.

Raizen’s E2G ethanol is produced using lignocellulosic biomass, including sugarcane residue, which enhances ethanol production efficiency by 50%. With more than EUR4.3 billion (USD4.4) in pre-contracted sales, the company plans to consolidate its E2G assets into a new business unit, seeking a joint venture partner to inject fresh capital.

Additionally, Raizen is exploring the sale of its stake in Grupo Nos, which operates Oxxo convenience stores in Brazil. This retail segment is considered non-core to Raizen’s energy-focused operations. However, the Brazilian retail market faces challenges due to online competition and high interest rates, potentially complicating the sale.

Parent company Cosan, which has diversified interests ranging from fuel distribution to iron ore investments, has faced financial pressures due to rising debt levels and lower-than-expected returns from recent ventures. Analysts have noted the importance of asset optimisation in stabilising the company’s finances.

No final decisions have been made, and discussions remain ongoing. Both Raizen and Cosan have declined to comment on the developments, according to Bloomberg.