Mubadala Sovereign Fund, Abu Dhabi’s Crown Prince, Is Eyeing the Collapse of Eike Batista’s Empire

Brazil Is One of the Main Investment Targets of the Mubadala Sovereign Fund, Which Aims at Wind Farms in Bahia and Troubled Assets in the Country

Mubadala Sovereign Fund with around US$ 5 billion in assets in Brazil – including the former RLAM refinery of Petrobras and three metro lines in Rio de Janeiro – is eyeing the collapse of Eike Batista’s commodities empire and is now seeking more troubled assets in the country.

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It’s an impressive turnaround from a US$ 2 billion investment in Eike’s holding that nearly vanished in 2013, when it became clear that the former magnate’s oil wells were dry, leading to a three-year dispute to recover several assets from the businessman, such as a stake in the company that owns Burger King and a commercial tower in the Leblon neighborhood of Rio.

Operation Car Wash was a pivotal moment for Mubadala. The fund of the Crown Prince of Abu Dhabi stepped in to negotiate the purchase of a toll road in the state of São Paulo from Odebrecht, leveraging its experience with Brazilian corporate debt and restructuring acquired during 11 debt-for-equity swap transactions with Eike.

And it doesn’t stop there: the focus on distressed assets remains. “We continue to focus on the complexity, assets tied to the old Lava Jato companies,” said Fahlgren.

Brazil Is One of the Main Investment Targets of the Mubadala Sovereign Fund

According to the executive, the company has just closed its first specific fund for Brazil, worth US$ 311 million, and is currently raising funds for a second, larger fund.

In total, Mubadala Capital has US$ 16 billion under management, and Brazil is one of its four main investment areas, alongside global private equity, venture capital, and a hedge fund.

Mubadala’s most recent investment was the acquisition of the RLAM refinery that belonged to Petrobras, for US$ 1.8 billion. The newly acquired asset is a bet on a competitive fuel market that is in the sights of consumers and politicians ahead of the 2022 presidential elections.

“Political turbulence is part of the country and it won’t stop,” he said. “When we see temporary market shifts driven by an election, it’s an opportunity to invest for the long term due to reduced competition.”

Mubadala aims to reduce RLAM’s carbon footprint. While many investors have completely avoided oil projects due to environmental concerns, the sovereign fund sees an opportunity to cut emissions from existing infrastructure still in operation in the coming decades.

In Addition to Assets of Former Billionaire Eike, Mubadala Targets Wind and Solar Farms in Bahia

Mubadala is also eyeing wind and solar farms in Bahia to power the refinery with as much renewable energy as possible. It is also seeking to increase the production of biofuels at the facility and expand pipelines to eliminate the carbon-intensive use of tanker trucks for distribution.

Overall, Mubadala estimates more than US$ 1 billion in potential improvements. “We can deploy our capital in a polluting asset and make it better,” said Fahlgren.

Eike Closes Partnership with China and Gains ‘Infinite’ Capital to Implement Oil and Gas, Mining, Renewable Energy, and Infrastructure Projects in Brazil

After watching his empire crumble, former billionaire Eike Batista has been spending his time nurturing a list of at least 11 projects that he calls ‘unicorns,’ which include a gas pipeline linking Brazil to Paraguay, new gold mines, renewable energy, and nanotechnology, as reported exclusively by Brazil Journal.

For those who are unfamiliar, CDIL (Chinda Development Integration Limited) has been an active participant in the Belt and Road Initiative, a project through which China has increased its geopolitical power by investing in the infrastructure of dozens of countries around the world since 2013.

The new business dealings between the Chinese and the former billionaire will work as follows: Eike contributes his pipeline of projects (including assets and optioned assets) and CDIL provides the seemingly infinite capital, as well as bringing various Chinese banks and state-owned enterprises that will be responsible for supplying machinery, equipment, and services, and when it comes to agricultural or metal commodities, they will ensure the purchase of the production in the form of offtake agreements. Read the full article here.