- Brazilian biofuel company Raizen SA, a joint venture of Royal Dutch Shell plc and Cosan SA, is said to have raised 6.9 billion reais in this year's biggest public offering in Latin America.
Brazil's largest producer of sugar and ethanol sold 810,811, 000 indicative shares at 7.40 reais apiece on Tuesday, the bottom of the preferred range, said the people who asked not to be named as the information isn't public yet.
The company also sold the supplementary allocation of 121,621, 650 shares, said the people. The IPO values the firm at approximately $14.3 billion based on the outstanding shares listed in its filings.
Raizen gained momentum on prospects for increased ethanol demand from Brazil's biofuels program, while the firm also got a boost from record high sugar prices amid global deficits. Raizen announced in February its acquisition of rival Biosev, its biggest bet on sugarcane in many years, a deal that came as part-owner Shell was under pressure to reduce its carbon footprint.
Raizen, also a major fuel distributor in Brazil, will use proceeds from the offer to buy new plants and build new plants as it expands production of renewable products. The firm plans to grow 20 plants to produce second generation ethanol from 2031 - made from food crops rather than agricultural waste.
Some do not want the upcoming expansion. Raizen's plan would require heavy investments and an accelerated execution, says Felipe Ruppenthal, analyst of Eleven Financial Research, in a July 27 report.
Eleven recommended investors scoop up Raizen shares at the cost of up to 8.50 reais, the mid-point of the indicative range. However, Ruppenthal said investors should be wary of execution risk and growth that will only be achieved in the long run.
Banco BTG Pactual SA is leading the offer. Other banks who helped to fund Citigroup Inc. start credit Suisse Group AG, Banco Bradesco BBI SA, JPMorgan Chase Co. Santander Brasil, XP Inc. HSBC, Safra SA and Scotiabank are part of the deal.