Mubadala, the Abu Dhabi government investment company, has opened an office in Brazil after successfully securing assets from the crumbling empire of the country's former billionaire Eike Batista.
The Abu Dhabi Fund had invested $2 billion in Mr Batista’s EBX Group in 2012, but the deal took a turn for the worse when the flamboyant businessman’s newly minted commodities interests failed to meet production targets amid collapsing commodity prices that quickly plunged Brazil into a recession.
The deal, however, came with guarantees that allowed Mubadala to recoup or buy salvageable assets if the agreement fell to pieces, as it did.
As a result of the three-year restructuring that began in 2013, the Abu Dhabi fund said this weekend it had retrieved $300 million in cash as well as a stake in Burger King and Tim Hortons, now worth more than $700m. Other assets retrieved include a stake in a port and a gold mine.
“The completion of this complex restructuring has enabled us to gain a portfolio of assets which hold attractive, long-term value in sectors aligned with and complementary to core Mubadala business, such as metals and mining, infrastructure and real estate,” said Carlos Obeid, Mubadala’s chief financial officer.
Mr Obeid also said that Mubadala had relocated some of its top asset management teams to Brazil as well as embarking on a hiring spree in the South American country to help the fund manage and grow its portfolio assets.
As well as the cash and the stake in a fund that holds Restaurant Brands International stock, the holding company of Burger King and Tim Hortons, it received a 32.5 per cent equity interest in Porto Sudeste, an export terminal for Brazil’s main iron-ore producing region and a 14.5 per cent of its royalty bonds. Mubadala and the commodities trader Trafigura Beheer completed the purchase of a controlling stake in the Rio state for $400m.
Oscar Fahlgren, the head of Mubadala’s office in Rio de Janeiro, told Bloomberg News that the Abu Dhabi fund had more than doubled the value of its stake in Restaurant Brands International, which it got from Mr Batista in 2013 for $300m during the first phase of the multibillion-dollar restructuring.
In total, Mubadala estimates its legacy Batista assets, including the Restaurant Brands shares, at $2.3bn, more than they invested in Mr Batista during his heyday, Mr Fahlgren said.
That figure includes the $300m in cash Mubadala retrieved from Mr Batista during the early phases of the restructuring.
“We’re comfortable where we’ve ended up, and do not regret having made our investment,” Mr Fahlgren said from the fifth floor of the Leblon Executive Tower in Rio de Janeiro, one of the assets it acquired from Mr Batista in exchange for debt.
“If you had asked us in May or June of 2013, you would have gotten a different answer.”
Mubadala’s original investment was for preferred equity in EBX, Batista’s holding company, which had terms including leverage restrictions and personal guarantees from Batista.
That made it easier for the fund to negotiate than the bond and stockholders who were wiped out in the downfall of Batista’s commodities empire, Mr Fahlgren said.
mkassem@thenational.ae
* with Bloomberg News
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