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Mubadala Capital Set to Boost Brazil’s Economy

The UAE’s firm investment in Brazil will have a positive impact on the country’s economy by creating jobs, driving innovation, and fostering economic development

Mubadala Capital, the asset management subsidiary of Mubadala Investment Company, has emerged as one of the leading investment players in Latin America as it launched a significant move by investing in Brazil, a country known for its vast economic potential and diverse market opportunities.

In the latest move, the investment arm of Abu Dhabi sovereign wealth fund intends to invest about $13.5 billion on a major biofuels project in Brazil over the next decade, under broader plans for the country that include the creation of a new stock exchange.

This initiative also includes the construction of five processing units, each valued at $2.7 billion and capable of producing 20,000 barrels of biofuel daily. The first unit is expected to begin operations by the end of 2026. The project will also include the conversion of an existing oil refinery in the northeastern Brazilian state of Bahia acquired from government-owned Petrobras in 2021.

This strategic investment by Mubadala Capital in Brazil reflects the firm’s confidence in the Brazilian economy and its long-term growth prospects. The company is increasing its bets on Latin America’s largest economy, where its holdings span metro lines and medical universities to a majority stake in the local owner of the Burger King brand.

In an interview with the Financial Times, Mubadala Capital’s head of Brazil Oscar Fahlgren divulged the details of the fund’s plans to produce renewable diesel and sustainable aviation kerosene primarily utilising non-food plant matter and said Mubadala’s Brazilian subsidiary, Acelen, will initiate the development of a large-scale biofuel project by 2026.

He said the funds for the multibillion project will be sourced through a blend of equity and debt over a span of five to 10 years. Mubadala’s venture into bioenergy will leverage its existing $6 billion investments in the country, constituting approximately a quarter of the group’s global portfolio. “We’ve been very active investing in Brazil, for the past 10-plus years, in an environment where most foreign investors have been shying away,” Fahlgren said.

Mubadala also plans to open a stock exchange in Brazil next year through its Americas Trading Group. “Brazil is a very large country. It has only one stock exchange. And I think that’s suboptimal infrastructure for the players that operate in this segment,” said Fahlgren.

SAILGP TEAM

In another major development, Mubadala Capital and SailGP, the global racing championship, have announced a strategic investment to acquire a newly-formed SailGP Team to represent Brazil.

Brazil will join the startline of the global racing championship from the beginning of Season 5, which commences in November 2024. SailGP and Mubadala’s partnership also extends off the water.

Last month, both organizations announced a new production partnership with Strata Manufacturing, a Mubadala-owned aerospace facility, to develop and manufacture new SailGP hydrofoils and rudders to be introduced in Season 5, as well as other key elements of SailGP’s F50 catamarans. “We are thrilled to partner with SailGP to form the first-ever South American SailGP Team,” said Fahlgren.

INVESTMENT FUND

Earlier, Mubadala Capital closed its second investment fund in Brazil with total commitments of more than $710 million. It did not, however, reveal details about the investors. “The consummation of our second Brazilian flagship fund marks a decade long track-record of successfully operating and investing in Brazil,” said Oscar Fahlgren.

BSOF II will invest primarily in control positions in mature companies that are facing some form of complexity or distress, but where the underlying business fundamentals are compelling, Mubadala said. In February last year, Mubadala Capital closed its first fund in Brazil with total commitments of $322 million.