Middle East Appetite Growing as Abu Dhabi Makes EBX Bet

Abu Dhabi sovereign wealth fund Mubadala Development Company has agreed to pay $2bn for a 5.63% stake in Brazil’s EBX group, underscoring the growing trend of big-ticket Mideast equity investments in LatAm. Bankers say they are spending more and more time pitching sovereign wealth funds with investment opportunities in a diversifying number of LatAm sectors, with the caveat that the Middle Easterners need size. “We are talking a lot to these investors to pitch them private transactions. There has been an increased interest since the end of last year,” says a Sao Paulo-based ECM banker, referring to investments with structures similar to EBX and other deals recent years, including investments in BTG Pactual and Santander Brasil. This interest does not yet appear in the public equity transactions, he notes, in which tickets are not big enough to meet buyer appetite. “These deals take time, and like any other country, you start with the most solid and concrete sectors,” says another banker, explaining the pace and the tendency for deals in FIGs and infrastructure. At this point, sovereign funds have a preference for pre-IPO investment in the big names who are sector leaders, bankers say. EBX, the holdco for billionaire Eike Batista’s family of companies, fits this profile and offers exposure to several sectors, mostly in Brazil. The price suggests a valuation of $35.5bn for the privately held group, which is made up of 11 known business units, only 5 of which are publicly listed. The valuation is higher than the total market cap for global oil services company Halliburton, which stands at $31bn. Officials at EBX decline to comment on the transaction. The deal gives Mubadala a 5.65% stake in the Centennial Asset Brazilian Equity Fund, the holding vehicle through which Batista controls EBX and it also gives it a presence in future EBX venture investments. Basing the valuation purely on the value of the listed companies, the price paid by Abu Dhabi is a 40% premium above