The official admission of Raízen () that the solution to your financial crisis may involve, if necessary, a request for extrajudicial recoveryexplained in a relevant fact on the 4th, is the culmination of a process that has been dragging on in recent years.
A true perfect storm hit the company. One of the main causes of the crisis was the growing debt for risky investment bets on energy transition projects that had slower returns than expected. And the company too started to focus on areas far from the main corel. That in a high interest environment and operational losses due to severe weather conditions.
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Raízen was born in 2011, from a joint venture between Shell and the Cosan group (), controlled by Rubens Ometto. The company quickly established itself as the world’s largest producer of sugarcane ethanol and one of the main producers in the Brazilian sugar and alcohol sector.
Since 2016, the company has made a bold bet, investing in long-term projects financed with debt.
But, as José Luiz Mendes, Strategy and M&A consultant at StoneX, recalled this week in analysis, this is a strategy that works when interest rates are low. “When the cycle turned [a Selic passou a subir]the account got tight. With high leverage, any shock – weather, price, financial cost – becomes a crisis. Drought and fires were triggers, but not the root cause. Less leveraged companies absorb these impacts; highly leveraged companies enter a spiral”, diagnosed the expert.
One of these investment bets was second generation ethanol projects (E2G). The company went deep into the thesis that there would be a relevant premium for being a cleaner fuel, which spoke directly to the global phase of energy transition.
For Mendes, the problem was the financial premise: the market did not pay this premium at the expected speed. “There was a disconnect between the ESG narrative and the customer’s real willingness to pay more, in addition to a still immature carbon market. In other words, it escalated before validating the economic return”, he assessed.
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Furthermore, while Raízen invested resources in this frontier technology, corn ethanol grew quickly, with a competitive cost and much simpler execution. “The ‘green’ thesis ended up facing pragmatic competition that delivered immediate results.
Exaggerated diversification
Finally, the group also made a mistake, in the opinion of experts, in excessive diversification, which ranged from trading and solar energy to a partnership to explore Oxxo stores in Brazil and internationalization.
Wrong bets by the holding company Cosan, such as a billion-dollar investment in shares in the mining company Vale, could also be included in this account. “When the ore fell and there was a loss in value, Cosan lost its ability to support Raízen.”, Mendes highlighted.
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The deterioration in business can be explained only by comparing the results of recent fiscal years. Raízen had a net profit of R$3 billion in 2021/2022, when its debt was R$13.8 billion, or 1.3 times Ebitda, a position considered healthy to support the growth cycle in the years ahead.
In the balance sheet for the fiscal year 2025/2026, however, the loss totaled R$15.6 billion until the third quarter, due to a non-cash provision of R$11 billion. Meanwhile, net debt jumped to R$55.322 billion and leverage rose to 5.3x.
In the conference call, the executives highlighted that the company was returning to focus on the core business of sugar and ethanol production, and distribution of fuels and lubricants. In fact, in recent years, the company has started selling underperforming businesses or getting rid of assets that were simply not part of the original core business. The financial solution of capitalization, however, came up against a lack of agreement between the partners, who were increasingly pressured by creditors.
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See below a timeline of the Raízen crisis prepared by InfoMoney:
2011 – Cosan and Shell announce a joint venture and the creation of Raízen, to explore the production and commercialization of sugar and ethanol, as well as the generation of energy from sugarcane bagasse.
2016 – Begins expansion phase and announces firm commitment to 2nd generation ethanol (E2G)
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August/2020 – Raízen announces joint venture with Femsa, owner of the Oxxo network. They created the NOS Group, with the aim of leveraging the convenience store business at gas stations.
August/2021 – Holds the biggest IPO of the year, which raised R$6.9 billion
2021 – Announces the purchase of Biosev, a subsidiary of Louis Dreyfus, for R$3.6 billion in cash and shares
2021 – Group announces the start of construction of the 3rd and 4th E2g plants, with the expansion of biofuel production capacity to 280 million liters from 2024.
2022 – Net profit for the 2021/2022 fiscal year is R$3 billion and net debt amounts to R$13.8 billion, with leverage of 1.3 times Ebitda
December/2022 – Itaú buys preferred shares in Cosa Nove, a subsidiary of Cosa, part of the Raízen conglomerate, for R$4.115 billion
2023 – In the balance sheet for the fiscal year, the company announces net profit of R$3.9 billion, with debt rising to R$20.4 billion, although leverage remained at 1.3 times Ebitda.
2024 – Raízen announces that its net profit fell to R$1.3 billion, 67% below the previous fiscal year’s gain; net debt was R$19.154 billion and leverage remained at 1.3x.
April/2024 – Announces the sale of 31 distributed solar generation plant projects (“UFVs”) to Élis Energia, from Pátria Investimentos, for R$700 million
November/2024 – Sells sugarcane plants, with a capacity of 900 thousand tons, to Alta Mogiana for R$381 million
November/2024 – Nelson Gomes replaces Ricardo Dell Aquila Mussa as CEO of Raízen. Rafael Bergman replaces Carlos Alberto Bezerra de Moura as financial and investor relations director
2025 – Announces a net loss of R$4.2 billion in the year 2024/2025 and the company explains that the 2024/2025 Ethanol, Sugar and Bioenergy (EAB) harvest was impacted by the severely dry climate; debt rose to R$34.2 billion and leverage rose to 3.2x.
January/2025 – Cosan sells stake of around 4% in mining company Vale for R$9.1 billion
March/2025 – Raízen repurchases 50% of Itaú’s stake in Cosa, for R$2.169 billion.
May/2025 – Raízen sells the Leme Plant, in Piracicaba, for R$425 million, to Ferrari Agroindústria and Agromen Sementes Agrícolas
June/2025 – Announced the split between Raízen and Raízen Energia
July/2025 – Announces that it will discontinue Usina Santa Elisa and transfer 3.6 million tons of sugar cane for R$ 1.045 billion, including its own cane and the assignment of contracts with suppliers to a group of plants led by Usina São Martinho
July/2025 – Sells to the Thopen and Gera groups (with whom it had a joint venture) 55 distributed generation assets, for an aggregate value of approximately R$600 million
August/2025 – Sells Rio Brilhante and Passa Tempo, in the municipality of Rio Brilhante (MS), to Cocal Agroindustrial for R$ 1.5 billion
September/2025 – Raízen and Femsa groups decide to separate: Shell Select and Shell Café remain with Raízen alone and Mexicans are in charge of running Oxxo alone in Brazil.
September/2025 – BTG and manager Perfin capitalize R$10 billion on Cosan. A succession plan for Rubens Ometto is announced, within a period of six years
November/2025 – Sells the Continental plant, located in the municipality of Colombia (SP), to the Colorado Group, for R$700 million
November/2025 – Company loses investment grade by Moody’s
February/2026 – Announced loss of R$15.6 billion until the 3rd quarter of the fiscal year, explained by a non-cash provision of R$11 billion; net debt jumped to R$55.322 billion and leverage rose to 5.3 times Ebitda
February/2026 – S&P and Fitch remove the company’s investment grade
February/2026 – Rumors that Swiss Mercuria is close to buying Raízen assets in Argentina for more than US$1 billion
March/2026 – Raízen Energia agrees to sell three solar power plant projects to Braso
March/2026 – Shell commits to investing R$3.5 billion in the capitalization of Raízen, but awaits a similar signal from Cosan/negotiation involves R$500 million from a vehicle controlled by Aguassanta Investimentos, owned by the family of Rubens Ometto Silveira de Mello
March/2026 – Agreement between partners for capitalization fails and company admits that it seeks to implement a ‘comprehensive and definitive’ solution to strengthen its capital structure, which may include an extrajudicial recovery
