Investment company controlled by Bolsonaro’s “friend" grows with the crisis in Brazil

Last November, President Jair Bolsonaro (Liberal Party) took the opportunity of his second official trip to the United Arab Emirates to meet with Abu Dhabi’s crown prince Sheik Mohammed bin Zayed. 

Even though Zayed is not officially a head of state, Bolsonaro met him as if he was. He took ministers with his entourage, including the minister of economy, Paulo Guedes.

Although the meeting was too formal, it had a friendly atmosphere, according to federal deputy Eduardo Bolsonaro (Social Liberal Party – São Paulo state), Bolsonaro’s son, who attended the event. On Twitter, Eduardo said that his father and Zayed “seemed like old friends seeing each other again” while talking in front of their countries’ flags.

Eduardo also said their “friendly relationship” was positive for Brazil since it generates Arab investments in the country. He mentioned Mubadala Investment Company, based in the United Arab Emirates, whose president is Zayed. 

Mubadala is Abu Dhabi's sovereign wealth fund. This type of fund gathers a country's capital reserves, for instance, and uses these resources in investments so that they grow for the benefit of the owning country.

The company has about $243 billion invested in more than 50 countries. Recently, Mubadala took advantage of its good bonds with Bolsonaro and the crisis affecting Brazilian companies to increase its contributions in Brazil by purchasing assets at a low price while the country’s economy wanes. 

Crisis generates opportunities

In November last year, days after the meeting between Bolsonaro and Zayed, Mubadala announced the acquisition of subway concessionaire Metrô Rio, responsible for managing the city’s subway network. Previously, Metrô Rio was owned by Invepar, a Brazilian investment fund company facing financial difficulties and a debt of almost $378 million with Mubadala.

Mubadala exchanged the debt for 51% of Metrô Rio shares. According to Oscar Fahlgren, head of Mubadala’s Brazil office, the company used Metro’s “complicated context” to acquire it, which has “a good prospect of operational recovery and long-term profitability”.

Before that, in 2019, Mubadala fund had purchased from Odebrecht part of the control of Rota dos Bandeirantes, a toll road in São Paulo. Rota dos Bandeirantes filed for judicial recovery after the Operation Car Wash.

In 2014, taking advantage of the collapse of EBX group (a company owned by Brazilian businessman Eike Batista), Mubadala took command of Porto Sudeste, in the city of Itaguaí, Rio de Janeiro state.

From Odebrecht, also, it is speculated that Mubadala wants to purchase part of the petrochemical company Braskem. Petrobras is one of Braskem's partners.

State-owned refinery

Mubadala’s last acquisition in Brazil was Landulpho Alves Refinery (Rlam) in Bahia state. Its purchase was concluded in November 2021. Rlam was the country’s first national refinery, created in 1950 and owned by Petrobras. It can produce more than 30 different products, including gasoline, diesel, and lubricants.

Petrobras sold Rlam for $1.65 billion to reduce its debts and overcome the crisis that hit the company during Operation Car Wash.

According to evaluations by the Institute for Strategic Studies in Petroleum, Natural Gas, and Biofuels (Ineep, in Portuguese), Rlam was worth $3.12 billion. It is twice the price Mubadala paid for the company. Ineep studied three scenarios to establish the refinery's market value. In one of these scenarios, the institute even indicated that Rlam could have been sold for $3.92 billion.

After purchasing Rlam, Mubadala changed its name to Mataripe Refinery, created Acelen, a company to manage Mataripe, and successively readjusted the prices of fuels produced there. It made Bahia have one of the most expensive fuels in the country, according to the National Petroleum Agency (ANP, in Portuguese).

Risk to the economy

For the economists with whom Brasil de Fato spoke to, the rise in the gas price in Bahia state indicates that Mubadala’s investments in Brazil are not necessarily positive. They agree that the arrival of international funds in the country is, supposedly, good. However, if it is not followed by a development process, it can put Brazilian strategic sectors under the interests of other countries.

“A refinery from a state-owned company must profit but also guarantee the supply of the domestic fuel market. If this kind of refinery now belongs to a foreign fund, the concern with the domestic market is no more. All that matters is profit”, considers William Nozaki, professor at the São Paulo School of Sociology and Politics (Fespsp, in Portuguese).

Economist Iriana Cadó, an expert in economic development, states that foreign funds are not always interested in the development of countries in which they have investments. She also highlighted that their activities in strategic sectors are a risk to the country’s sovereignty.

“Since we have international investments purchasing the rights of companies that provide basic services such as oil, LPG, and transport, they dictate how it must be produced”, she says. “It puts the national sovereignty at risk”.

Cadó also highlighted that national companies profit in Brazil and reinvest their profits in the country to generate more money. A foreign fund's goal is to use its profit in the country to benefit the fund’s owners, which live abroad. By the way, Mubadala’s owners live in the United Arab Emirates.

“The profits go to other countries, where the real ‘heirs’ live”, she said. “They [the profits] didn’t come back to the Brazilian society”.

Economist Pedro Mattos explained that countries like China developed because of foreign investments. Therefore, they are not always bad for the country receiving them. According to him, the problem is that Brazil does not have a clear project for its own development, which makes these funds have too much power in our economy.

“In general, overcoming [a country's economic] dependence presupposes, to a certain extent, the inflow of foreign capital, as China itself demonstrates. Now, our dependence increases due to the current political context, in which there is the deepening of the neoliberal agenda with the strengthening of neo-fascism”, he stated.

Silence from Mubadala

On March 18, Brasil de Fato tried to contact Mubadala to hear from it about their investments in Brazilian companies. Mubadala did not respond at the time of publication.

Acelen, Mubadala’s company that manages the refinery formerly called Rlam, informed that the prices of their fuel are based on the costs of oil, dollar, and contractual conditions signed with their clients.

Mubadala usually does not comment on business opportunities that the company is still evaluating. However, it is a fact that it continues to seek investments in Brazil and is welcome by the Bolsonaro government.

This month, Mubadala representatives visited Brazil’s National Land Transport Agency (ANTT, in Portuguese) to talk about projects, mainly in the railway sector. At ANTT, the director of operations and institutional relations at Mubadala Capital (Mubadala's branch), Ricardo Paes, praised the concession models of the Bolsonaro government.

Paulo Guedes, in turn, said that the United Arab Emirates is Brazil's "ideal partner" when he was in that country as a member of the president’s entourage during a trip that took place last year. Guedes has already met with Fahlgren at least three times as Minister of Economy.

Brasil de Fato asked Mubadala if the company’s connections with government members facilitate or increase the interest in making business in Brazil. The company did not respond.

Edited by: Rodrigo Durão Coelho