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Raízen IPO aims to accelerate growth of Shell’s renewable energy joint venture in Brazil
Aug 5, 2021
Shell Brazil Holding B.V. (Shell), a subsidiary of Royal Dutch Shell plc, today marks the start of 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 (B3), following the successful execution of an initial public offering (IPO).
“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 cane1. 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.
1 Raízen produces first generation ethanol from sugar cane, and it is also 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. Second-generation biofuels such as these are Shell’s primary focus for investment and scaling up biofuels availability. Further information on Raízen’s biofuels production is available on the Raízen website.
Notes to editors
- 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 Raizen will be around 43.5% each, although both will continue to hold 50% of the ordinary voting stock.
- 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 sugar cane, 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 – see below).
- In February 2021, Raízen announced an agreement to acquire Biosev, a leading ethanol producer in Brazil (subject to deal completion). In May 2021, agreement was reached to extend the Retail Brand Licence Agreement between Shell and Raízen, under which retail sites operated by Raízen carry the Shell brand and sell Shell fuels, by 13 more years with options to extend. And in June 2021, agreement was reached for Raízen to acquire Shell’s lubricants business in Brazil (subject to deal completion), and an investment decision was taken on a new second-generation biofuels plant which is due to begin production in 2023 and will add 82 million litres of cellulosic ethanol production capacity per year to Raízen’s current 38 million litres.
- The São Paulo Stock Exchange, now known as B3 (Brasil, Bolsa, Balcão) is one of the largest exchanges in the Americas. Over 350 companies are listed on the exchange, with a total market capitalization of around $1.08 trillion. B3 is a listed company (B3SA3) and serves as the main integrator for several indexes in the Brazilian Stock Market (Ibovespa, IBrX-50, IBrX, Itag).
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