São Paulo, Brazil, May 2020 — On May 15 th , Eixo SP signed a 30-year concession agreement with ARTESP (the transportation agency of the São Paulo State) to modernize and expand Piracicaba-Panorama (PiPa). This is the largest highway tender in Brazil in terms of length of roads and investment amount.
IFC, a member of the World Bank Group, advised Sao Paulo State’s Transportation Regulatory Agency (ARTESP) on structuring and tendering the concession. IFC’s advisory was supported by a technical and financial partnership among BNDES (Brazil’s National Bank for Economic and Social Development), the Inter-American Development Bank (IDB) and IFC, created in 2007 to improve the provision of public services in Brazil through infrastructure development with the participation of the private sector.
Eixo SP is the company created by the Infraestrutura Brasil Consortium formed by Brazil’s Patria Investments and GIC, the Singapore sovereign fund, which won the tender in B3, the Brazilian stock exchange, in January this year. The consortium offered a record high premium upfront fee in roads concession in Brazil of BRL 1.1 billion (or US$ 270 million), representing a 7.209% premium over the minimum price of US$ 4 million.
The PiPa system, with a 1,273 km of extension, will receive BRL 14 billion in investments (equivalent to US$ 3.4 billion), of which BRL 4 billion (equivalent to US$ 1 billion) in the first five years. It will also create 7,000 new direct or indirect new jobs in the first two years of the contract.
“We are excited to partner with São Paulo State to develop a new, innovative roads concession model,” said Richard Cabello, Head of IFC Advisory on PPPs for Latin America and the Caribbean . ”Through a well-structured and competitive process supported by IFC, the State has been able to attract much needed investments to the development of Brazil’s infrastructure,” he added.
IFC, with the support of the partnership with BNDES and IDB, has been advising the São Paulo State on its New Roads Concession Program since 2016. IFC has so far advised São Paulo in four successful roads concession tenders; the first one was the Midwest Roads system in 2017. Through this advisory, IFC has helped to secure approximately US$ 6 billion in private investments, attracting to Brazil a wider variety of world-class players with large investment capacity, including traditional operators, private equity and sovereign funds.
“The concessions signed by São Paulo State in the last four years have set new benchmarks in terms of concession fees and international participation,” said Bernardo Tavares de Almeida, IFC Head of Advisory on PPPs for Brazil . “Together with São Paulo, IFC is helping to show that well-structured and competitively tendered infrastructure projects can attract global interest to the Brazilian infrastructure and secure new sources of financing for the country”, he added.
In partnership with the São Paulo State, IFC has brought international best practice to roads concessions in Brazil, implementing innovations, while improving bankability and quality of services for the population. IFC helped to develop a new concession model that increased transparency through provision and disclosure of quality studies, reports, data, and transaction documents in English and Portuguese; and enhanced bankability and investor attractiveness through provisions such as the foreign exchange protection mechanism, the three-party agreement and new early termination rules.
IFC has been investing in Brazil’s private sector since 1957, addressing the country’s most critical development challenges, including those of urbanization, social inclusion, healthcare, educational services, competitiveness and productivity, and management of natural resources.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2019, we invested more than $19 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org .
About the Partnership BID, BNDES and IFC
Created in 2007, it is a partnership among the National Bank for Economic and Social Development (BNDES), the Inter-American Development Bank (IDB) and the International Finance Corporation (IFC), to improve the provision of public services in Brazil through the development of infrastructure with the participation of the private sector. The partnership supports the structuring and implementation of innovative and bankable projects in Brazil in line with best national and international standards.
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