8. Brazilian ethanol producers file for IPO’s
2007 also was the year of Brazilian Initial Public Offerings (IPO’s). In February, São Martinho raised R$423.7 million ($200.6 million) by placing 18.75% of its shares in the Brazilian stock exchange Bovespa. In July, Acucar Guarani did the same, raising R$665.7 million. Cosan, already listed since 2005, made a second IPO in August with Cosan Limited, raising $1.2 billion. Still in the pipeline is the IPO of Louis Dreyfus Commodities Bioenergia SA, the Brazilian subsidiary of French commodities group Louis Dreyfus. The company announced in September that it had filed with regulators for clearance to go public on the Sao Paulo Stock Exchange.
The capital raised in these IPO’s will be used to fuel expansion strategies, expanding current sugar mills and acquiring other producers. With approximately 400 mills and over 100 companies participating, the Brazilian ethanol market is still considerably fragmented. This wave of IPO’s will contribute to further consolidation of the market, which is why this development is listed number 9 in the most important ethanol events list of 2007.
7. Foreigner’s share doubles in Brazilian ethanol market
In August 2007, sugar consultant Datagro reported that overseas groups and investors were in control of 12 percent of all cane crushed in Brazil, compared with 5.7 a year ago. Large commodity groups such as Téreos, Louis Dreyfus (2001) and Cargill (2006) had already entered the market, but 2007 witnessed the entry of US commodity giant Bunge Limited, Spanish ethanol producer Abengoa Bioenergy, Global Foods through the CNAA joint venture with Santa Elisa and the expansion of Infinity Bio-Energy.
As a result of the increasing foreign interest, the asking price for sugar mills has skyrocketed, but it still seems that 2007 has been the year that large multinational companies and investors have started to take a serious interest in the Brazilian ethanol market. Expert believe that this will reduce the volatility of the market and contribute to the further development of an international ethanol market. As a result, the increasing share of foreign owned cane capacity in Brazil is listed number 7 in the most important ethanol events list of 2007.
© Ethanol Statistics 2008
|