(Bloomberg) -- Brazilian company Raizen SA is mulling the sale of a stake in its second-generation ethanol plants to raise cash for investments and help its main shareholder reduce debt leverage, according to people familiar with the matter.

Raizen, a publicly traded joint venture between Brazilian conglomerate Cosan SA and petroleum giant Shell Plc, is also considering whether to sell its stake in the Brazilian operator of Oxxo convenience stores, the people said. The chain isn’t core to the company’s business, the people said, asking not to be named because discussions are private. 

No final decision has been made on either business, and talks may not end in a deal, the people said. Raizen declined to comment.

For the E2G business, Raizen is mulling a partnership in a new business unit that would gather all of related assets, including two plants that are already operating. The new partner would join Raizen in a JV by injecting capital in that new E2G unit. Raizen would then be able to scrap the recurrent investments it has already committed from earnings.

The stake in the ethanol business has been offered to investment funds, the people said. E2G biofuel is produced from plant dry matter, also known as lignocellulosic biomass. Raizen’s proprietary technology uses sugarcane residue to enhance ethanol production by 50%. It has about €4.3 billion ($4.48 billion) in sales already contracted, according to a presentation on Raizen’s website.

Oxxo’s Brazilian operator is Grupo Nos, a partnership between Raizen and Mexico’s Fomento Economico Mexicano SAB, which operates the convenience-store brand across Latin America. Retailers in Brazil have struggled against online competition and high interest rates, which could make the stake a tough sell. 

Cosan, a sugar and ethanol empire that has sprawled into everything from lubricant production and gasoline distribution to rail transportation and natural gas home supply, has seen shares plunge to the lowest level since the beginning of 2019. Leverage has climbed after a 2022 decision to take on debt to buy a minority stake in the iron ore producer Vale SA, an investment that provided returns deemed “mediocre” by BTG Pactual SA.

Cosan has told investors that all options are on the table to improve its balance sheet, including selling part or all of its 4.1% interest in Vale, Bloomberg reported in September, citing people familiar with the matter. The company has also weighed selling Raizen’s Argentine gasoline distribution business. No final decision has been made. 

--With assistance from Dayanne Sousa.

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