Finance
Shell ready for bigger backstop of Brazil sugar-ethanol JV Raizen, sources say
Published by Global Banking & Finance Review®
Posted on February 25, 2026
3 min readLast updated: February 25, 2026
Quick Summary
Shell is ready to expand its backstop for Raizen’s recapitalization after a R$15.6B Q3 loss and rising debt. Cosan and Rubens Ometto may add funds as Raizen faces rating downgrades and pursues asset sales, including in Argentina.
Shell Poised to Boost Support for Brazil Sugar-Ethanol JV Raizen
By Luciana Magalhaes, Oliver Griffin and Sabrina Valle
SAO PAULO, Feb 25 (Reuters) - Oil major Shell, the healthier joint-venture partner in Brazilian sugar and ethanol producer Raizen, is ready to pour more resources into a recapitalization of the distressed company, three people familiar with the matter told Reuters.
Raizen Recapitalization and Funding Outlook
Raizen, a top global sugar maker, is in tough financial straits after posting a third-quarter net loss of 15.6 billion reais ($3 billion) in mid-February, when it warned of "significant uncertainty" about its ability to keep operating.
The beleaguered sugar and biofuels producer saw its net debt climb to 55.3 billion reais by the end of December, due to a combination of heavy investments, erratic weather and wildfires, which led to weaker harvests and lower crushing volumes.
Shell’s Potential Capital Injection
As of last week, Shell was open to injecting 2.5 billion reais into Raizen but has since indicated it would offer up to 3.5 billion reais, subject to certain conditions, according to two of the sources.
A third source confirmed Shell had offered more financing in recent weeks. Although nothing is settled until a final deal is inked, the source added, Shell is clearly willing to chip in a disproportionate amount to the capital injection.
Ownership and Additional Contributions
Shell and its joint-venture partner Cosan, an industrial conglomerate built by Brazilian billionaire Rubens Ometto, each own 44% of Raizen.
Cosan, which is undergoing a financial restructuring of its own, could contribute 1 billion reais, while Ometto - Raizen's chairman - may provide up to 1 billion reais, contingent on financing now under negotiation, sources said.
Funding Needs and Asset Sales
One creditor told Reuters that to shore up its finances, Raizen would need some 25 billion reais, including fresh investment and the proceeds from the sale of its Argentine unit, which is expected to fetch about $1 billion.
Shell, Cosan, and Ometto declined to comment.
Advisers Appointed and Credit Downgrades
This month, Raizen appointed law firms Pinheiro Neto and Cleary Gottlieb, along with financial adviser Rothschild & Co, to assess its strategic alternatives. The move prompted downgrades of Raizen's credit ratings by major agencies including S&P Global, Fitch and Moody's.
In its report, Moody's cited the firm's high leverage, cash burn, high interest burden and weaker-than-usual results in its core sugar-ethanol segment.
Exchange Rate: $1 = 5.1292 BRL
($1 = 5.1292 Brazilian reais)
(Reporting by Luciana Magalhaes, Oliver Griffin and Sabrina Valle; Editing by Brad Haynes and Andrea Ricci )
Key Takeaways
- •Shell is prepared to increase its backstop for Raizen’s recapitalization, with talks indicating support could rise to about R$3.5 billion, subject to conditions.
- •Cosan may contribute around R$1 billion and chairman Rubens Ometto could add up to R$1 billion, contingent on financing under negotiation.
- •Raizen reported a third‑quarter net loss of R$15.6 billion and warned of uncertainty over its ability to continue operating.
- •Net debt rose to R$55.3 billion by end‑December amid heavy investments, erratic weather and wildfires depressing harvests and volumes.
- •Credit ratings were cut by S&P, Fitch and Moody’s after Raizen appointed Pinheiro Neto, Cleary Gottlieb and Rothschild & Co to assess strategic options, while a sale of its Argentine unit could raise about $1 billion.
Frequently Asked Questions about Shell ready for bigger backstop of Brazil sugar-ethanol JV Raizen, sources say
1What is the main topic?
Shell is prepared to increase its financial support for a recapitalization of Raizen, the Shell–Cosan sugar‑ethanol JV, as the company deals with heavy losses, high debt and rating downgrades.
2How much funding is being discussed?
Sources indicate Shell could raise its contribution to about R$3.5 billion, while Cosan and chairman Rubens Ometto may each add up to R$1 billion, pending financing and final terms.
3Why is Raizen seeking recapitalization?
Raizen posted a R$15.6B Q3 loss and saw net debt climb to R$55.3B, driven by heavy investments, weather impacts and wildfires that weakened harvests and volumes.
4What other measures is Raizen considering?
It hired Pinheiro Neto, Cleary Gottlieb and Rothschild & Co to evaluate options and is exploring divestments, including the potential sale of its Argentine assets for around $1B.
