* Abu Dhabi stake comes as EBX group speeds investments
* Mubadala EBX share is fund's biggest Latin America foray
* Most EBX group company shares rise, led by MMX Mineracao
* EBX, Mubadala consider fertilizers, LatAm
By Amran Abocar and Jeb Blount
Dubai/Rio de Janeiro, March 26 Abu Dhabi state
investment fund Mubadala said on Monday it will buy a
$2 billion stake in Brazil's EBX Group, providing fresh capital
to the Brazilian conglomerate as it boosts spending on oil,
ports, shipyards, mines and electricity.
Mubadala, which has stakes in General Electric and
private equity firm Carlyle, said the investment will
give it a 5.63 percent preferred equity interest in Centennial
Asset Brazilian Equity Fund, the personal investment company of
Brazilian billionaire Eike Batista, who is behind the EBX Group.
The investment comes as EBX seeks to raise an additional $1
billion for its shipbuilding and ship-leasing company OSX Brasil
and billions more in debt and equity capital to
expand oil and gas output, complete port facilities, build
thermal power plants, and dig iron ore and coal mines.
"For EBX this is a kind of farm-out with a strategic
investor," Batista told Reuters in a telephone interview. "They
(Mubadala) have spent a year in our offices doing due
diligence," he said, adding that "their confidence provides more
proof of our investment potential."
"They do know a bit about oil," he said of Mubadala, based
in the oil-rich United Arab Emirates. For Batista, Mubadala is
the latest in a string of international partners, including
Germany's E.ON, Portugal's EDP and General
Electric that show confidence and "branding" for his
projects, most of which are still in start-up stages.
E.ON signed a $34 billion agreement with EBX's MPX in
The investment in EBX is the biggest ever in Latin America
by the $46 billion Mubadala fund. The fund is looking to Latin
America and other emerging markets for faster growth than more
developed markets in North America and Europe.
"This ... transaction marks our first significant direct
investment into one of the fastest growing markets and is an
important step in Mubadala's development of strategic
opportunities in Brazil and Latin America," Khaldoon al-Mubarak,
Mubadala's chief executive and managing director, said in a
The EBX investment follows a report this week that Mubadala
is in talks to take a stake in a Guinean bauxite joint venture.
Shares of Batista-controlled MMX Mineracao, EBX's
iron ore unit, rose 5.03 percent in Sao Paulo, while LLX
Logistica, EBX's port and transportation company,
rose 0.81 percent. OSX rose 0.94 percent, while electricity,
coal and natural gas unit MPX rose 1.35 percent.
Brazil's benchmark Bovespa index of the Sao Paulo stock exchange
rose 1.32 percent.
OGX, the EBX group's oil and gas unit, fell 2.4
percent. Brazil's No. 2 oil company by market value, OGX plans
to produce 1.4 million barrels of oil and natural gas equivalent
That is about half the current output of the United Arab
Emirates, of which Abu Dhabi is a part.
Through Centennial, the investment gives Mubadala an
indirect stake MMX, LLX, MPX, OSX and OGX as well as in sports
marketing, gold mining, healthcare, beauty products and
While most EBX companies are in the start-up phase, the
group is expected to generate $15 billion in annual operational
earnings by the end of 2015, Batista, Brazil's richest man, said
The deal will also give Mubadala, which has assets worth
about $46 billion, "participation in both EBX and Mr. Batista's
pipeline of future investment opportunities, such as technology
companies, cement, fertilizers, entertainment and others," the
The fertilizer investments are planned for Brazil's
northeastern state of Maranhão, where MPX and OGX have large
natural gas resources. Mubadala and EBX hope to produce crop
nutrients for Brazil's growing agricultural frontier in the
country's northeast and Cerrado region using that gas, Batista
"The next 30 million tonnes of Brazilian grains production
is going to come from this region and we are close to it with
cheap gas," Batista said. "Mubadala is very interested in food
security and growth crops to supply the Emirates with food."
The fertilizer investments are going to be a private EBX
venture through Centennial and not part of one of EBX's traded
companies, Batista said.
He also hopes the investment will help him speed up
construction at OSX's shipyard on the grounds of LLX's Port of
Açu, north of Rio de Janeiro.
Troubles at Brazil's largest shipyard, Estaleiro Atlantica
Sul near Recife, could result in additional business for OSX as
state-led oil company Petrobras seeks to speed its
own offshore oil and gas investments.
Samsung, the Korean partner in Atlantico Sul, recently quit
after disagreements with its Brazilian partners and low
"Their loss could be our gain," Batista said. "Petrobras is
looking carefully at our project as an alternative to Atlantico
While EBX is based in Brazil, the world's sixth-largest
economy, Batista and his EBX companies also have mining and port
assets in Chile and Colombia, which could help open those
markets to further Mubadala investment in Latin America.
Mubadala is seeking ways to use its oil revenue to develop
and sustain Abu Dhabi and its social services in view of
diminishing oil reserves.