Morgan Stanley to invest in alcohol plant in Brazil
Valor Econômico - 07/08/2008
The Morgan Stanley group will invest in an alcohol plant in Brazil and will define its partner for the new undertaking until the end of the year. The interest of one of the three major American investment banks in Brazilian ethanol started last September, when the commodities division of the group initiated the exportation of the fuel in the country. Although it is a relatively new business for the company, the exportations of ethanol contracted by the Morgan Stanley commodities area for 2008 should amount to 10 to 15% of the total shipped in the country. Unica (Sugarcane Industry Association) estimates total exportations of up to 5 billion liters for the 2008/09 harvest. "Morgan Stanley is interested in sugarcane alcohol", Valor was told by Irineu Meira, vice-president of the commodities division in Brazil and energy coordinator, which includes oil and byproducts, a branch controlled by the Morgan Capital Group, which will be responsible for the investments in plants in Brazil. Morgan Stanley's investments will be defined in the next months and should not be restricted to only one industrial unit. At this first moment, however, the group analyzes a participation of nearly 40% in this first plant. What is certain is that this first plant should be located near a port, preferably Santos (SP). In the country, the commodities division of the group started trading alcohol after September 2007. Brazil already provides more than 50% of the global volume of ethanol traded by Morgan Stanley, according to Irineu Meira. The group has its own gas formulation companies in the USA and Europe. Half of the volume exported by Morgan Stanley is used by the companies of the very group and the rest by the international market. According to Meira, part of the ethanol exported by the group from Brazil is sent to Transmontaigne, which works in the formulation of the gasoline that will be distributed to the American gas stations. This formulated gasoline receives a mixture of nearly 10% of Brazilian anhydrous alcohol. Morgan Stanley formulates approximately 20 billion liters of gasoline a year. In Europe, the country's anhydrous alcohol arrives through the port of Rotterdam, in Holland, and it is also added to the gas before it is distributed to the gas stations. Meira affirmed that the group also has interest in doing the same in the Asian market, mainly in Japan and Singapore. Foreign interest in the sugar and alcohol sector of the country is not new and reflects the demand potential for ethanol in the international market. Groups linked to the financial market have also started looking at the segment as a means of investment. The first one was American bank Goldman Sachs, which, by means of a fund, negotiated minority interest in the Santelisa Vale group, in Sertãozinho (SP), in 2007.