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Posted on March 27, 2012
By Samantha Pearson in São Paulo and Camilla Hall in Kuwait City An investment arm of the Abu Dhabi government is to pay $2bn for a stake in Eike Batista’s EBX group as the Brazilian billionaire raises cash to compete with Petrobras, Brazil’s state-run oil company.
In its biggest emerging market deal so far, Mubadala will receive a 5.63 per cent stake in EBX and an indirect interest in the holding group’s publicly listed companies, including the fast-growing OGX Petróleo e Gas Participações.
Mr Batista, Brazil’s richest man, has built up an estimated personal fortune of $30bn and an empire that ranges from logistics and mining to sports marketing and beauty companies. He has also muscled his way into Brazil’s state-dominated oil industry, investing in the country’s newly discovered, vast “pre-salt” fields in an attempt to become its biggest private producer of crude.
Abu Dhabi and Qatar are looking to Latin America for investments but so far most funds have concentrated on agricultural assets.
EBX said yesterday that Mubadala’s investment will be used to reinforce the group’s capital structure as well as fund new enterprises.
“The investment considerably strengthens the entire group and its ability to successfully implement current and future projects,” Mr Batista said, adding that it was the first time a strategic partner company had invested in the holding company itself.
According to EBX, the deal will also give Mubadala the chance to participate in Mr Batista’s pipeline of future investments, such as technology , cement, fertilisers and entertainment companies.
Mr Batista has often chosen to form strategic alliances as a way to raise money for his new projects. In January this year, the German utility Eon agreed to invest EUR350m ($470m) in return for a 10 per cent stake in EBX’s energy company, MPX.
For Mubadala, the deal marks its biggest investment in emerging markets after smaller moves in countries such as Nigeria and Russia. With assets worth about $46bn and stakes in companies ranging from General Electric to the Carlyle Group, Mubadala signed its first joint venture in China last year, investing $150m in the smelting industry.
“This well-structured transaction . . . is an important step in Mubadala’s development of strategic opportunities in Brazil and Latin America,” said Khaldoon Khalifa al-Mubarak, Mubadala’s chief executive.