The JBS's new partner: the government of Indonesia

JBS NV – the company that controls JBS globally – announced today that Danantara, Indonesia's sovereign wealth fund, will invest $2.5 billion in a joint venture made up of the company's assets in Australia and New Zealand. The transaction – which will give Danantara 25% of the JV – valued JBS's Australian assets at $7.5 billion, half the entire market value of the Batista brothers' company. The stock rose 4.5% in mid-trading, with the company worth $15.8 billion on the New York Stock Exchange.

At the close of the transaction – which still depends on regulatory approvals – the sovereign wealth fund will invest $800 million in the JV, which will seek growth opportunities in Indonesia, Southeast Asia, Australia and New Zealand. Over the next three years, Danantara will invest the remaining $1.7 billion as the JV finds opportunities and raises more capital.

The idea, according to JBS, is to invest in greenfield and brownfield projects in these markets, as well as acquire protein plants and companies that are already in operation.

In the first two years after the closing of the $800 million, investments can only be made in Indonesia; from the third year onwards, the JV will have flexibility to invest in other markets. The company also said that after the completion of Danantara's total investment, the JV should seek to raise another $2.5 billion in debt, increasing the total amount to $5 billion.

This is the second deal with a sovereign wealth fund that JBS celebrates this year – always with the backdrop of governments seeking food security. In February, the Batista company formed a partnership with Oman Food Capital, the arm of Oman's sovereign wealth fund, in which it bought 80% of a package of assets for $150 million and became the operator.

At Citi, analyst Renata Cabral said that today's announcement is bullish for JBS's stock, as it "provides a reliable external valuation for one of JBS's best assets, while bringing third-party capital to finance expansion in Asia." According to the analyst, the Australian assets were valued at 9.3x EV/EBTIDA of 2025, above the multiple at which JBS itself trades today on the Stock Exchange, of 6x EBITDA.

The sovereign wealth fund included a protection clause in the contract. If the EBITDA of the Australian operation in 2026 and 2027 falls below that of 2025 (a record year for the business, with $981 million in EBITDA), Danantara will be entitled to compensatory shares, of up to 5% more of the capital. Furthermore, the JV should seek an IPO in the coming years.

If this does not happen within six years, Danantara will have the right to exchange all or part of its shares in the JV for new JBS shares, whose value will be the average of the 90 trading sessions prior to the exercise of the right.

The exchange right expires after 12 years from the completion of the transaction or in the event of an IPO. "We think the transaction is more important for what it says about JBS's valuation than for what it does for 2026 results," said the Citi analyst. According to her, despite Danantara paying a high multiple, "JBS will not receive cash at the holding level, and the conversion right may, in the future, result in the issuance of new JBS shares."

"None of this solves the problems of the US beef operation. Still, we see the announcement as positive for the stock: it strengthens the valuation thesis based on the sum of the parts, brings growth capital from an independent investor and can create a potential catalyst for an IPO," said Renata.

At BTG, analyst Thiago Duarte reached even more positive numbers. According to him, the JV will carry a net debt of around $1 billion, implying an enterprise value of the JV of $8.5 billion (pre-money). "We estimate that JBS's Australian operation will generate EBITDA of $760 million this year, implying a transaction multiple of 11.2x," wrote the analyst.

"Currently, we see JBS trading at 7x, which means an addition of $2.5 billion to its EV, or 16% of the market cap." The analyst notes, however, that the value generation decreases considering the adjustment mechanism of Danantara's position included in the contract. For every 5% drop in the average EBITDA of JBS Australia in 2026 and 2027, compared to 2025, the sovereign wealth fund's position in the JV increases by 1 percentage point.

"As we estimate an average EBITDA in the period 16% lower than that of 2025, we expect Danantara's final position to reach 28%," said BTG. "This would reduce the implied pre-money equity value of the JV to around $6.4 billion, and implies a value creation of $1.4 billion for JBS, or 9% of its market cap."