CEB Profile - Key messages
CEB gets money invested in the sugar cane and ethanol sector in Brazil. It is not a new entrant - it uses its investment manager's long standing relationships with the sector, to help the sector accelerate growth and consolidate.
CEB's investment manager - Temple Capital Partners comprises Czarnikow Sugar - the worlds leading market services provider for sugar and ethanol, Agrop - a leading agriculture and industrial processing consultancy and service provider. Through this partnership CEB can call upon the services of some 40 professionals in Brazil and many more through Czarnikow's worldwide network. This constitutes the largest team focused on investing in the sector in Brazil .
By being invested CEB gets a foothold on the escalation of asset values in the sugar cane sector as this moves from the basis of agricultural valuation to energy valuation or even greater a carbonless energy valuation.
CEB invests in fully integrated businesses from sugar cane production to final customer. It is not dependant on outside supply of feedstock or exposed to the volatility of feedstock prices.
CEB's output prices are highly volatile which given leading edge risk management can create added value for the business whilst minimising risk to CEB's primary business objectives.
CEB guides and manages its business on equity returns and net asset value. Growth is as a result of improved operating performance and the building out of Greenfield developments.
CEB's investment analysis considers:
- cane cost delta - the degree to which feedstock prices will increase with sugar and ethanol output prices; and
- future equity over future capacity - indicating the capital appreciation prospects resulting from brown or greenfield development.
CEB does not require equity control to control its interests and CEB will always seek a free exit strategy, this is considered under the terms of its investment and shareholder agreements.
CEB has world class corporate governance led by non executive chairman Antonio Monteiro de Castro, currently the Chief Operating Officer of British American Tobacco.
CEB's investments practice socially and environmentally responsible management.
CEB will pay a 5p per share dividend in 2007/08. Investment in acquisition through a JV structure keeps CEB's investment capital in the business rather than paying out existing owners, this is used to fund greenfield expansion which in turn generates capital appreciation. Improved financial structuring of the JVs allow for increased debt leverage in the business thus increasing equity return.
CEB is attracting interest from other sugar producers and participants in the ethanol market who appreciate that CEB can provide an efficient low cost investment conduit for themselves to become invested in the sector.
