War in Ukraine drives a new wave of Arab investments in country
Even before the visit of the Saudi delegation that crowded the theater and foyer of the Federation of Industries of the State of São Paulo (Fiesp) last week — the official event of the group that brought representatives of some 80 companies from several economic sectors to Brazil — some M&A deals were already setting the tone for the increased interest of Arab sheiks in the country. At Faria Lima Avenue — the heart of Brazil’s financial system — it was very clear that investment in Brazil is likely to grow, with the counterpart that Brazilian businesspeople will also have to land in the Middle East.
There is potential, according to investment bankers, for the region to leave behind a small direct investment position until recently – it did not even appeared in Central Bank’s ranking in 2021, according to the latest available survey. Now, considering only what has already been committed, there is about R$50 billion ($10 billion), of which R$14 billion has already been invested this year in meatpacker BRF and mining company Vale alone.
Data from the Arab-Brazilian Chamber of Commerce show that between 2004 and 2019 Arab countries as a whole have already invested about $14 billion in the country. Brazil’s direct investment in the countries of the region between 2007 and 2020 amounted to $1.7 billion.
It was not for nothing that the first official event of the delegation was held at Fiesp, a building where the industry GDP is gathered, on Paulista Avenue, the country’s former financial corridor, and where the first talks to attract multi-billion investments from Saudi Arabia were built. Important ministers and allies of the Lula administration were present, such as Vice President Geraldo Alckmin, Aloizio Mercadante (president of the Brazilian Development Bank, or BNDES), Márcio França (Ports and Airports Ministry), and São Paulo Governor Tarcísio de Freitas, in an effort to attract dollars from the region.
The financial market wasted no time either. Other side events were organized in the same week by BTG Pactual, XP, and Sete Partners. André Skaf, son of the former Fiesp president, who led the federation for four terms and tried unsuccessfully to run for governor of the state of São Paulo, is a partner in the latter.
President Luiz Inácio Lula da Silva canceled a dinner with Saudi Arabia’s Crown Prince Mohammed bin Salman in Paris on June 23 because of his busy schedule in Europe that week. Luxurious gifts, such as valuable jewelry and others not so much, from Saudi authorities to the government under former President Jair Bolsonaro were turned into an investigation by the Federal Police this year for not having been stated to Brazil’s Federal Revenue or incorporated into the assets of the federal government.
The recent operations open a new phase of investment from Arab countries in the Brazilian market. Funds such as Mubadala – in this case from Abu Dhabi and shareholder of companies such as Atvos, ATG and Cerc – QIA and Adic have been in the country for a longer time.
The interest of these countries is not only to find assets in Brazil, but also to attract companies willing to do business in the Middle East. Therefore, some banks are ready to build this bridge.
*Por Fernanda Guimarães, Mônica Scaramuzzo — São Paulo
Source: Valor International