Companhia Nacional de Açucar e Álcool (CNAA), a joint venture between founding shareholders Santa Elisa and Global Foods Holding, has closed a US $240 million private equity placement with an investor consortium led by the Carlyle/Riverstone Renewable Energy Infrastructure Fund. ING Bank in Sao Paolo acted as advisor in the transaction.  Riverstone committed US $187 million of the total $240 million round. 

According to Andre Biagi, Chairman of Sertãozinho-based Santa Elisa and Co-Chairman of CNAA, Santa Elisa “teamed up with international sugar trader and processor Global Foods one year ago to establish the CNAA joint venture to build and operate four high-efficiency greenfield sugar and ethanol production facilities and to develop 120,000 HAs of sugar cane plantations in Minas Gerais and Goias. Now that CNAA has closed on its US $240 million private equity placement with one of the world’s leading renewable-energy private equity investors, we have created a management team led by Santa Elisa’s CEO, Anselmo Rodrigues to accomplish this objective.”

CNAA, whose equity including the equity provided by the sponsors now exceeds US $300 million, plans to construct at least four sugar and ethanol mills in the Centre-South Region of Brazil. The mills will have a total planned capacity of 20 million tons of crushed cane per year and will generate enough electricity to be energy self sufficient and sell excess electricity to the local grid. During the first phase of development, CNAA will create 6,000 new permanent jobs. Three of the four projects, located in Ituiutaba and Campina Verde, in the state of Minas Gerais and Itumbiara in the state of Goias, have been under development for most of 2006 and are expected to start production in the 2008 and 2009 crop seasons. CNAA expects to secure the fourth project within weeks.

Riverstone’s Michael Hoffman is pleased that Carlyle/Riverstone’s long and in-depth search for a low-cost production and development platform for sugar and ethanol in Brazil has led to this investment in CNAA. “We believe that ethanol plays a valuable and growing role in the global fuel mix. The combined capabilities of Santa Elisa and Global Foods make CNAA an advantaged platform from which to compete and pursue growth in the growing markets for sugar and biofuel products” he said. CNAA is the largest investment to date in Riverstone’s growing portfolio of biofuels investments that includes ethanol and biodiesel production facilities in the US, Canada and Europe.

Global Foods Holding’s Allan Kahane, Co-Chairman of CNAA, stresses that “it is CNAA’s intention to take Santa Elisa’s strength as an industry pioneer for the past 70 years to the newer cane-growing areas of Brazil where efficiency gains are still achievable with the use of state-of-the-art technology and from selecting an ideal agricultural lay-out.” He added that with the support of CrystalSev (one of Brazil’s largest sugar distributors, in which Santa Elisa is the largest shareholder) and Global Foods “CNAA will optimize its sales mix of sugar and ethanol in both the domestic and export markets.”