Petrobras Mulls Investment in Raízen to Re-enter Ethanol Market

Petrobras is considering investing in Raizen to re-enter the ethanol market. Raizen's shares have hit a record low after a billion-real loss and debt surge. The company is looking for a new minority partner and has signed deals for the sale of distributed generation assets. Raizen is also seeking refuge in its core business after a Q4 loss and rising debt.

Brazilian state-run oil company Petrobras is reportedly considering an investment in sugar and ethanol producer Raizen (RAIZ4.SA) to re-enter the ethanol market, according to a report by local newspaper O Globo [1]. The oil company is studying several options, including joining Raizen as a partner or buying assets from the firm, with a potential decision by year-end.

Raizen, controlled by Shell (SHEL.L) and Brazilian conglomerate Cosan (CSAN3.SA), is facing operational challenges and high debt. The company has been adopting measures to reduce leverage, including divestitures and shutting down a major mill [2]. Raizen's shares have hit a record low after a net loss of 1.8 billion reais ($333.12 million) for the first quarter of the 2025/26 crop year [3]. The company's core earnings fell 23.4% year-on-year to 1.89 billion reais, missing the 2.16 billion reais forecast by analysts [3].

Raizen's Chief Financial Officer, Rafael Bergman, acknowledged the possibility of a new shareholder after the weak results, stating that divestitures should continue, with updates likely in the coming quarters [2]. The company has been actively exploring options for a capital injection, including potential minority partners [4]. Raizen has hired investment banks to look for a new minority partner and is also selling assets in the energy sector, including its fuel operations in Argentina [4].

Petrobras' potential investment in Raizen could provide a strategic move for the oil company to diversify its portfolio and re-enter the ethanol market. For Raizen, a new partner could help alleviate financial pressures and accelerate the deleveraging process. However, the timing is not ideal for sellers, with informality and tax fraud in Brazil's fuel distribution market continuing to rise, potentially discouraging buyers [4].

References:
[1] https://www.reuters.com/business/energy/petrobras-mulls-investment-raizen-re-enter-ethanol-market-o-globo-reports-2025-08-16/
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3U60ZC:0-shares-of-sugar-maker-raizen-hit-record-low-executives-open-to-new-partner/
[3] https://www.lse.co.uk/news/SHEL/shares-of-sugar-maker-raizen-hit-record-low-after-billion-real-loss-debt-surge-0mj5vebxm69jf5s.html
[4] https://valorinternational.globo.com/business/news/2025/08/15/under-debt-pressure-raizen-seeks-partner-for-business.ghtml