Raízen Raises $1.15B in Biggest Brazil IPO of the Year

Argentina Aviation Fuel/Sustainable Aviation Fuel (SAF)BioChemicals/Renewable Chemicals BioRefineries/Renewable Fuel Production Brazil Business News/Analysis Feedstocks Field/Orchard/Plantation Crops/Residues Funding/Financing/Investing Marketing/Market Forces and Sales Netherlands Opinions Sustainability

August 16, 2021

Print This Article Share it With Friends

Helena Taveres Kennedy (Biofuels Digest) hares have started trading in Raízen’s IPO – which also happens to be the largest Brazilian IPO of 2021. They raised $1.15 billion and even though shares are priced at the bottom of the suggested range, this is big news for this Shell, Cosan joint venture company.

In today’s Digest, Raízen’s business and background, the potential for Shell not only for cellulosic ethanol but also for other molecules that Shell is working on in fuels, the IPO details, and more.

What the IPO means

First, the background…Shell Brazil Holding B.V., a subsidiary of Royal Dutch Shell plc, started trading in shares of Raízen S.A., the renewable energy joint venture between Shell and Brazilian energy company Cosan, on the São Paulo Stock Exchange (known as B3 – Brasil, Bolsa, Balcão), following the successful execution of an initial public offering.

What is the point of the IPO? Well, to accelerate growth of Shell’s renewable energy joint venture in Brazil of course.

...

Raízen is a global leader in the production of first- and second-generation biofuel from sugar cane – and according to Shell, it’s 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.

...

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.

...

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).

In February 2021, Raízen announced an agreement to acquire Biosev, a leading ethanol producer in Brazil (subject to deal completion).

...

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.

...

This all ties in together and Shell is smart in finding ways to hit that 2050 target with cellulosic ethanol as well as other routes to get there.

Like Shell’s sustainable aviation fuel MOU with Rolls-Royce to help decarbonize the aviation sector as reported in The Digest last month.

Or how about Shell’s work with National University of Singapore to develop fuels from CO2?

And a big one – Shell Catalysts & Technologies work with Australia-based Licella and their joint venture with Canfor (Arbios Biotech) to work on a low-carbon biorefinery with Licella’s Cat-HTR (Catalytic Hydrothermal Reactor) technology.

And let’s not forget a Digesterati favorite – that Shell invested in LanzaJet to help scale up SAF production. READ MORE