Petrobras considers investment in Shell-backed Raizen, sources say

(Bloomberg) – Shares of Raízen SA soared on Monday, posting their biggest intra-day gain on record, after the newspaper O Globo reported that state-controlled oil producer Petrobras is considering investing in the sugar and ethanol producer. 

Raízen, a joint-venture between Brazilian holding Cosan SA and London-based Shell Plc, is seeking a capital injection, executives said last week. According to the newspaper report, Petroleo Brasileiro SA is considering several options, such as becoming a partner in Raízen or purchasing assets, which would mark its return to the ethanol sector. 

Raízen and Cosan declined to comment, while Petrobras didn’t immediately respond to questions. 

Raízen’s stock soared as much as 16% Monday, a few days after recording its worst session ever following quarterly earnings. Still, the stock is down over 45% so far this year, the worst-performing company on the nation’s Ibovespa stock index. Shares in Petrobras gained 1.1% today.

“Petrobras has been talking about returning to distribution for some time now, and has also taken some steps to enter other energy sources, particularly renewable energy,” said Fernando Siqueira, head of research at Eleven Financial Research. “Investors aren’t likely to welcome this type of initiative, but it can’t be ruled out that Petrobras will make this move.”