Mubadala Development, the Abu Dhabi sovereign wealth fund, is looking for partners to buy some assets in Brazilian tycoon Eike Batista's mining, energy and logistics conglomerate Grupo EBX, a source with direct knowledge of the situation said.
A deal could involve buying assets or a stake in oil producer OGX Petroleo & Gas Participações SA and MMX Mineração & Metálicos SA, said the source, who declined to be identified because the talks remain private.
Bloomberg News reported on Tuesday, citing two sources with knowledge of the situation, that Mubadala may spend up to $1 billion to buy stakes in OGX, MMX and LLX Logistica SA's Porto do Açu port.
Talks between EBX and Mubadala come weeks after Batista, who has seen his fortune slump over the past year, renegotiated $2.3 billion in debts to Mubadala, EBX's single biggest creditor. A successful spree of asset sales could help alleviate Batista's debt woes and other problems that have slashed about $25 billion from his holdings.
"The agreement we signed in July with EBX gives Mubadala improved protection for the remaining portion of its investment against certain assets," a spokesman for Mubadala said in a statement. "Mubadala remains in close discussions with EBX and a number of interested parties, as EBX continues to restructure its businesses."
A spokeswoman for Rio de Janeiro-based EBX declined to comment, as did a spokesman for investment banking firm Grupo BTG Pactual, which Batista named its main financial advisor in April.
Mubadala, in the statement, said it believes "many EBX assets have significant potential value for Mubadala and other investors." The fund has not taken any writedown on its Brazilian investments, the spokesman said by phone.
If Mubadala takes a stake in any EBX companies, it would be increasing its exposure to Brazil as a time when the $2.2 trillion economy is grappling with eroding productivity and a generalized drop in confidence, a weakening currency and slowing Chinese demand - the driving force behind Brazil's boom in the last decade.
Batista still owns stakes in six traded companies, oil producer OGX, port operator LLX, mining company miner MMX, shipbuilder and ship operator OSX Brasil SA, power producer MPX Energia SA and coal miner CCX Carvão de Colombia SA.
Batista left as chairman of the board and sold most of his stake in MPX to Germany's E.ON SE. MMX already has partners in Chinese steelmaker Wuhan Iron and Steel Co and South Korea's SK Networks.
OGX sold a stake in one oil field to Malaysia's state oil company Petroliam Nasional Bhd, or Petronas, and partnerships with others. OSX is 10 percent-owned by South Korea's Hyundai Group.