Brazilian development bank BNDES has approved a 3 billion real (US$549 million) loan for construction work on the brownfield Piracicaba-Panorama (PiPa) highway system in the state of Sao Paulo.
Last year Sao Paulo and its transportation agency awarded a 30-year concession to a consortium made up of Brazilian private equity firm Patria and Singapore's investment fund GIC. PiPa is among the largest road projects ever to be awarded to a private-sector company in Latin America.
The project involves upgrading 1,224 kilometres of highways that cross 62 municipalities between Piracicaba, northwest of megacity Sao Paulo, and Panorama which lies to the west, on the border with the state of Mato Grosso do Sul.
BNDES said its loan corresponds to 58% of the investments that PiPa will make in the first seven years of the concession. The investments will allow the duplication of lanes, construction and expansion of bridges and viaducts, and implementation of third and fourth lanes and marginal roads. They will also include the construction of user service stops and toll plazas.
The loan is being extended to Eixo SP Concessionaria de Rodovias SA, which signed the concession agreement under a design-build-finance-operate-maintain (DBFOM) structure.
Eixo SP is a specific purpose company controlled by Patria Infraestrutura IV Fundo de Investimento em Participacoes Multiestrategia (Patria-FIP IV), which holds 70% of the shares indirectly. Patria-FIP IV is a fund managed by Patria Investimentos, an alternative investment fund manager with global operations. US firm Blackstone holds a stake in Patria.
The remaining shares belong to NY Fundo de Investimento em Participacoes Multiestrategia (FIP-NY), which is controlled by Singapore's GIC.
Infrastructure strategy
The GIC infrastructure strategy is to invest in large, unlisted infrastructure assets, including mature and low- to moderate-risk assets in developed markets, complemented by investments with higher growth potential in emerging markets
Sao Paulo signed the contract with Eixo SP in May 2020. During the 30 years of the concession, a total of 12 billion reais will be invested in construction and maintenance works.
PiPa is formed by two road systems. The first one comes from the old Centrovias, a 200km toll highway previously operated by Arteris and transferred to Eixo SP in June 2020. The other system is composed of various stretches of highway that total around 1,000km.
Blackstone invested in a 40% stake in Patria a decade ago, and had been seeking control. However, the founders turned down an offer, and it was agreed that Patria would undertake an initial public offering, allowing Blackstone to reduce its stake to 14%. The US$588 million IPO took place late last month.
Patria manages more than US$14 billion in private equity, credit, real estate and infrastructure funds.
As South America's largest economy, with a population of 212 million and an active public-private partnership programme, Brazil has emerged as an important destination for large-scale investments from global infrastructure investors. GIC opened an office in Sao Paulo in 2014.
