For the past few years, Latin America’s energy sector has caught the attention of many private equity funds looking to invest in the region. In 2006, over $300 million was invested in the sector, almost a third of the $1 billion that was invested in the region.

Clean Energy Brazil, a biofuel fund that hopes to consolidate Brazil’s booming ethanol-producing industry, expects to raise up to $600 million for its  Alternative Investment Market arm.

“We believe that the global ethanol market is in its infancy…..If all the deals we are looking at go through we would want about $600 million but it’s more likely to be $200 million to $400 million in the second or third quarter,” said Peter Thompson, who manages the UK-listed fund on behalf of investors including sugar merchant Czarnikow.

CEB invests in integrated sugar and ethanol production units in Brazil, giving investors exposure to Brazil’s domestic ethanol market and the growth in global ethanol demand.

It has already earmarked or spent the $200 million it raised in December’s flotation on the Alternative Investment Market. The money is going on developing mills and turning greenfield land into cane-producing farms with Brazilian company Usaciga.

“We found at the time of our float lots of investors said they weren’t interested in AIM start-ups … they said come back when you’ve got some revenue so now we’ve got a lot of people we will go back to see,” Thompson said.

CEB manages farming assets for Usaciga, in which it has a 49% stake. CEB arranged a re-financing of the company allowing it to acquire rights to develop two more greenfield assets than it had been expecting at the time of its float.

Alex Akesson
Contributing Writer
HedgeCo.Net
Email: Editor@hedgeco.net