Rubens Ometto gained a reputation as Brazil’s “Ethanol King” after turning his family’s sugarcane fields into one of the world’s largest biofuel companies. Now he’s making a $4.3 billion wager that could permanently reshape his empire.
The 72-year old billionaire is buying a minority stake in the world’s second-biggest iron-ore producer, Vale SA, capping a years-long effort to diversify into everything from gas stations to railways to hedge funds.
The proposed purchase stunned analysts and received a chilly reception from shareholders of Cosan SA, the Sao Paulo-based company in which Ometto owns a controlling stake worth about $2 billion. Cosan shares have fallen 14% since the Oct. 7 announcement on doubts Ometto, the grandson of farmers, can pull off his ambition of capitalizing on decarbonization through owning a piece of a mining company.
The race for ways to produce power with less fossil fuels has remade wealth around the world, with the electric-vehicle revolution boosting the fortunes of Tesla Inc.’s Elon Musk and lithium tycoon Julio Ponce Lerou. Ometto is hoping Vale — a major supplier of nickel, a key ingredient in electric-vehicle batteries — will give him a similar edge.
But questions have arisen as to how Vale fits into Ometto’s empire. His Cosan conglomerate includes a joint-venture with Royal Dutch Shell Plc that produces ethanol and owns 7,300 gas stations, a lubricant maker, more than 13,000 kilometers (8,078 miles) of railways in Brazil and the nation’s biggest natural gas distributor.
The “strategic fit” for the Vale purchase “remains unclear,” JPMorgan Chase & Co. analysts including Lucas Ferreira wrote in a note. Cosan tends to do better in “acquisitions they have clear synergies with or contribute to an operational turnaround,” they said.
But Binho — as Ometto is known — has a flair for drama. He’s obsessed with Brazilian novelas, the television dramas known for cheesy dialogue and implausible plot twists. An engineer, he first left the family business to work for some of the wealthiest dynasties in Brazil, including that of the late Ermirio de Moraes. When he returned in the 1980’s, Ometto started a decades-long dispute that ended with him wrestling control from the rest of his family.
For Ometto, the choice was clear. Either he changed the company’s direction, or “we were all gonna end up poor,” he said in a 2021 television interview.
‘Another Step’
Now he’s shaking things up again. The Vale purchase is part of a larger plan of “operating in sectors where Brazil has clear competitive advantage,” Ricardo Lewin, Cosan’s chief financial officer, said in a conference call last week.
The time to buy Vale shares is now, Cosan executives said, touting its steep discount to rivals such as Rio Tinto Group.
The transaction’s sheer size has raised concerns from analysts, who said the debt burden might be excessive. Cosan is funding the deal with a mix of loans.
The cost raises “further red flags,” UBS Group AG analysts including Luiz Carvalho wrote in an Oct. 10 report entitled, “Was this too much?”
Ometto is pouring money into Vale as it ramps up its strategy to become a key player in the transition from fossil fuels to alternatives. The Rio de Janeiro-based company recently said it’s weighing options for its nickel and copper operations — a move analysts say could lead to a spin off, potentially unlocking billions of dollars in value.
Ometto has also been diversifying his personal investments. His family office, Aguassanta Investimentos, helped jump start firms including Grimper Capital, a Sao Paulo-based hedge fund, and asset manager MAV Capital, which specializes in structured-credit products. He was also the biggest individual donor in this year’s Brazilian elections, helping elect dozens of mostly conservative lawmakers.
“Entrepreneurs and companies sometimes insist on keeping their same style instead of incorporating changes,” Ometto said earlier this year in a talk show hosted by fellow billionaire Abilio Diniz. “You need to adapt to what’s coming up.”
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