Shares have started trading in Raízen’s IPO, the largest Brazilian IPO of 2021. A Shell and Brazilian energy company Cosan joint venture company, they raised $1.15 billion, even though shares are priced at the bottom of the suggested range.
Shell Brazil Holding B.V., which is a subsidiary of Royal Dutch Shell plc, started trading in shares of Raízen S.A., the renewable energy joint venture on the São Paulo Stock Exchange, following the successful execution of an initial public offering, with the goal to accelerate growth.
“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.”
According to Shell, Raízen is the only company in the world to produce second generation ethanol on a commercial scale, reusing bagasse, the fibrous by-product of sugar cane production. Raízen is a global leader in the production of first- and second-generation biofuel from sugar cane.
The Shell-branded retail sites and lubricants business in Brazil and Argentina will continue to be managed by Raízen.
Shell has made the decision to invest in expanding 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.
According to The Digest, “Under the IPO, 810,811,000 preference shares have been made available to investors, at a price of R$7.40. The IPO has raised R$6.0bn (USD $1.15bn) 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 Raízen will be around 43.5% each, although both will continue to hold 50% of the ordinary voting stock.”
The investment banking units of Banco BTG Pactual, Citigroup, Bank of America, Credit Suisse Banco Bradesco SA, JPMorgan Chase & Co, Banco Santander Brasil, XP, HSBC, Safra and Scotiabank managed the offerings.
Earlier this month, The Digest reported that the Raízen IPO was likely priced at more than $1.1 billion on with more than 810 million shares sold near the lower end of the expected valuation at just $1.42 per share.
The Raízen IPO shows Shell is committed to pushing biofuels forward in order to reach their 2050 net-zero emissions energy target. Along with the Shell Catalysts & Technologies group which has been making several other initiatives proving their commitment to that 2050 target, it appears there could be lots of potential for Shell in Brazil not only for cellulosic ethanol but also for other molecules that Shell is working on in fuels.
