By Brazil Stock Guide – Cosan S.A. (B3: CSAN3; NYSE: CSAN) confirmed on Tuesday that it is evaluating, together with Shell, potential investors for a capital injection into Raízen (B3: RAIZ4), its fuels distribution and sugar-and-ethanol venture. The move comes as the heavily indebted Cosan group seeks to cut leverage by selling assets.
In a filing with Brazil’s CVM, Cosan said the discussion on a possible Raízen capitalization had already been flagged during its second-quarter earnings call. The company stressed, however, that no approvals or binding events have taken place so far, according to Rodrigo Araujo Alves, CFO and head of investor relations.
“The Raízen performance in recent years has drawn attention from global strategic players, especially in the ethanol segment,” a person familiar with the matter told Valor newspaper.
Global players circling
According to Valor, binding offers for a stake in Raízen are expected by early October. Bloomberg reported that Japan’s Mitsubishi is among the interested parties. Another Japanese conglomerate, Mitsui — which already partners with Raízen in other ventures — is also said to be weighing a bid.
The sale is expected to involve a strategic foreign investor keen to expand its foothold in the global ethanol market. The exact size of the stake has not yet been defined. “It depends on the size of the check,” one source told Valor.
Balancing debt and growth
A successful deal would provide Cosan with capital relief as it works to pare down debt, while also boosting Raízen’s ability to finance renewables projects and expand abroad. For Shell, bringing in new partners could spread risk and reinforce its role in the energy transition.
Cosan is being advised by Itaú BBA, while Shell has hired Citi. Cosan, Shell, Mitsubishi and Mitsui all declined to comment or did not immediately respond to requests for comment, report Valor.