Raízen, Shell’s renewable energy JV in Brazil, launches IPO
Shell Brazil Holding B.V., a subsidiary of Royal Dutch Shell plc, yesterday started trading in shares of Raízen S.A. (Raízen), the renewable energy joint venture between Shell and Brazilian energy company Cosan, on the São Paulo Stock Exchange (now known as B3), following the successful execution of an initial public offering (IPO).
Under the IPO, 810,811,000 preference shares have been made available to investors, at a price of BRL7.40 (USD1.43). The IPO has raised BRL6.0 billion (USD1.16 billion) to fund Raízen’s growth programme.
Following the IPO, and subject to an over-allotment option being exercised and completion of the Biosev acquisition, Shell and Cosan’s equity stake in Raizen will be around 43.5% each, although both will continue to hold 50% of the ordinary voting stock. Raízen announced an agreement to acquire Biosev, a leading ethanol producer in Brazil in February 2021.
Raízen was formed in 2011 as a joint venture between Shell and Brazilian energy company Cosan. It is an integrated energy company and leading producer of sugarcane, ethanol and bioenergy in Brazil. It has 26 production units, 860,000 hectares of cultivated agricultural land, a network of more than 7,300 Shell retail stations, 1,300 Shell Select convenience stores and more than 4,000 business customers in Brazil and Argentina. In its most recent financial year, 2020-21, Raízen produced around 2.5 billion litres of ethanol, excluding second generation cellulosic ethanol production.
“Shell is committed to Raízen as we grow our renewable energy business and our presence in Brazil and Argentina,” said Huibert Vigeveno, Shell’s downstream director. “This IPO should help Raízen to grow faster, enabling it to deliver more and cleaner energy to our customers. We believe this IPO is the best way to fund the strategy and provide consistent returns on investment for the joint venture partners and new investors alike.”
Raízen is a global leader in the production of first- and second-generation biofuel from sugar cane. It is pursuing an ambitious growth strategy, as shown by the recent agreement to acquire Biosev and the integration of Shell’s lubricants business in Brazil into Raízen (both subject to deal completion), and the investment decision to expand Raízen’s second-generation biofuels production capacity. Growing Raízen will also contribute to Shell’s target to become a net-zero emissions energy business by 2050, in step with society.
The Shell-branded retail sites and lubricants business in Brazil and Argentina will continue to be managed by Raízen.