Mubadala Development Co., the Abu Dhabi investment firm with stakes in General Electric Co. and the Carlyle Group, agreed Monday to pump $2 billion into Brazil's EBX Group, looking to tap into the growing South American market.
The funds will buy Mubadala a 5.63 percent stake in the Brazilian conglomerate, including an indirect interest in its various subsidiaries, the companies said in a joint statement announcing the deal.
EBX has interests in a range of industries, including mining, energy and power generation.
"This well-structured transaction marks our first significant direct investment into one of the fastest growing markets and is an important step in Mubadala's development of strategic opportunities in Brazil and Latin America," said Mubadala CEO and Managing Director Khaldoon Khalifa al-Mubarak.
EBX plans to use the fresh funds to strengthen its financial position and pay for new business ventures. It does not expect the deal to affect the management or day-to-day activities of the conglomerate's stable of publicly listed companies.
The deal could lead to further collaboration between Mubadala and EBX down the road, the companies said.
Mubadala is owned by the oil-rich government of Abu Dhabi, capital of the United Arab Emirates and the largest and wealthiest of the federation's seven city-states.
It is one of several companies the emirate uses to invest its oil wealth. It has traditionally focused on investments that can help diversify the sheikdom's economy. Its holdings include Abu Dhabi's Advanced Technology Investment Co., the high-tech firm that recently acquired full control of Advanced Micro Devices Inc.'s former microchip manufacturing unit.
EBX is based in Rio de Janeiro and is controlled by founder Eike Batista. It is the holding company for five publicly listed companies in Brazil _ OGX, OSX, MMX, LLX and MPX _ and a number of privately held businesses.
The Gulf's deep-pocketed investors have traditionally overlooked Latin America in favor of acquisitions in the United States, Europe and Asia. That could be changing.
In 2009, another Abu Dhabi state-backed company, Aabar Investments, invested $328 million in Banco Santander's Brazilian arm. Qatar's sovereign wealth fund topped that by buying a 5 percent stake in the same bank for $2.7 billion a year later.
Saudi Arabia's largest dairy company, Almarai Co., in December bought Argentine farm operator Fondomonte S.A. for $83 million to secure access to a supply of animal feed.