São Paulo, Brazil, July 2nd, 2021— Mobilidade 8 e 9 signed recently a 30-year concession agreement with the State of São Paulo to upgrade two operational lines in its metropolitan rail system, currently operated by CPTM (Companhia Paulista de Trens Metropolitanos), a state-owned company. The project will improve the suburban rail services for around 1 million commuters per day, and support São Paulo State to include more efficient and less polluting transportation options for Sao Paulo residents.
The concession was granted to Concessionária das Linhas 8 e 9 de Trens Metropolitanos after a competitive bidding auction on April 20th in the Brazilian Stock Exchange. Four bidders, representing local and international groups, participated in the most competitive tender ever observed for the sector in the country to date. ViaMobilidade 8 e 9, formed by CCR SA and RuasInvest, payed upfront fee of BRL 995 million (approximately $200 million), a premium of 202.56 pecent over the minimum fixed grant amount.
This was the first concession to operate lines of the metropolitan rail system granted to the private sector. With the signing of the concession, the consortium is undertaking the operation of the two lines for 30 years and will invest BRL 3.2 billion (approximately $635 million) in the first six years of the contract. Most of the investments will be directed to the purchase of new trains to renew CPTM's fleet. This private investment will enable the migration from carbon-intensive means of transportation, such as cars and motorcycles, to a low-carbon, clean energy-based transportation alternative. Investments will also be made to upgrade all stations of Lines 8 and 9, including modifications to reach universal accessibility standards; the revamping and modernization of the overall rail network structure; a new telecom and signaling systems; the improvement of the power supply systems; and the implementation of a new operational control center.
IFC advised the government of the state of São Paulo, through SEPOG (Secretaria de Projetos, Orçamento e Gestão), on the structuring, promotion, and the tendering process of a viable, bankable, and competitive concession for this public railway transportation service. The project was structured with the financial support from PSPInfra, a partnership between IDB, BNDES, and IFC created in 2007 to improve the offer of public services through the development of infrastructure in Brazil, with the participation of the private sector.
"The partnership with São Paulo State was key to develop a well-structured concession. This PPP highlights that well-presented and competitively tendered projects can attract much needed interest and investments to the Brazilian infrastructure and secure new sources of financing for the country," says Carlos Leiria Pinto, IFC's Country Manager in Brazil.
"IFC, with its global footprint in concessions, assisted in the structuring of one of the biggest urban mobility projects in Latin America nowadays and, as result, the experience of 1 million commuters per day will be improved. The project brought important competition to the sector and shows the importance of a transparent and well-managed project preparation, which selected a qualified operator at the end," says Tomas Anker, IFC's Investment Officer in PPP Transactions.
IFC, with the support of the partnership with BNDES and IDB, has also been advising São Paulo State on its New Roads Concession Program since 2016. So far, IFC has 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 $6 billion in private investments, attracting to Brazil a wider variety of world-class institutions with large investment capacity, including traditional operators, private equity, and sovereign funds.
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 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 2020, we invested $22 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 PSPInfra
PSPInfra, created in 2007, is a partnership between the Inter-American Development Bank (IDB), the Brazilian Development Bank (BNDES), and the International Finance Corporation (IFC) to improve the offer of public services through the development of infrastructure in Brazil, with the participation of the private sector. PSPInfra supports the structuring and implementation of innovative projects conducted in Brazil in line with the best national and international standards.
PSPInfra's partners invested their own financial resources to pursue a common goal and cooperate in strategic decisions that steer the partnership's work. They have complementary roles that ensure the success of each project. BNDES contributed with a substantial portion of the resources available, and IFC
has been acting as the lead advisor in transactions, with BNDES co-leading certain projects. The execution of new projects under the PSPInfra umbrella may adopt different formats. Said projects can either be led by IFC or have the shared leadership of IFC and IDB and/or BNDES.
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The concession was granted to Concessionária das Linhas 8 e 9 de Trens Metropolitanos after a competitive bidding auction on April 20th in the Brazilian Stock Exchange. Four bidders, representing local and international groups, participated in the most competitive tender ever observed for the sector in the country to date. ViaMobilidade 8 e 9, formed by CCR SA and RuasInvest, payed upfront fee of BRL 995 million (approximately $200 million), a premium of 202.56 pecent over the minimum fixed grant amount.
This was the first concession to operate lines of the metropolitan rail system granted to the private sector. With the signing of the concession, the consortium is undertaking the operation of the two lines for 30 years and will invest BRL 3.2 billion (approximately $635 million) in the first six years of the contract. Most of the investments will be directed to the purchase of new trains to renew CPTM's fleet. This private investment will enable the migration from carbon-intensive means of transportation, such as cars and motorcycles, to a low-carbon, clean energy-based transportation alternative. Investments will also be made to upgrade all stations of Lines 8 and 9, including modifications to reach universal accessibility standards; the revamping and modernization of the overall rail network structure; a new telecom and signaling systems; the improvement of the power supply systems; and the implementation of a new operational control center.
IFC advised the government of the state of São Paulo, through SEPOG (Secretaria de Projetos, Orçamento e Gestão), on the structuring, promotion, and the tendering process of a viable, bankable, and competitive concession for this public railway transportation service. The project was structured with the financial support from PSPInfra, a partnership between IDB, BNDES, and IFC created in 2007 to improve the offer of public services through the development of infrastructure in Brazil, with the participation of the private sector.
"The partnership with São Paulo State was key to develop a well-structured concession. This PPP highlights that well-presented and competitively tendered projects can attract much needed interest and investments to the Brazilian infrastructure and secure new sources of financing for the country," says Carlos Leiria Pinto, IFC's Country Manager in Brazil.
"IFC, with its global footprint in concessions, assisted in the structuring of one of the biggest urban mobility projects in Latin America nowadays and, as result, the experience of 1 million commuters per day will be improved. The project brought important competition to the sector and shows the importance of a transparent and well-managed project preparation, which selected a qualified operator at the end," says Tomas Anker, IFC's Investment Officer in PPP Transactions.
IFC, with the support of the partnership with BNDES and IDB, has also been advising São Paulo State on its New Roads Concession Program since 2016. So far, IFC has 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 $6 billion in private investments, attracting to Brazil a wider variety of world-class institutions with large investment capacity, including traditional operators, private equity, and sovereign funds.
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 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 2020, we invested $22 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 PSPInfra
PSPInfra, created in 2007, is a partnership between the Inter-American Development Bank (IDB), the Brazilian Development Bank (BNDES), and the International Finance Corporation (IFC) to improve the offer of public services through the development of infrastructure in Brazil, with the participation of the private sector. PSPInfra supports the structuring and implementation of innovative projects conducted in Brazil in line with the best national and international standards.
PSPInfra's partners invested their own financial resources to pursue a common goal and cooperate in strategic decisions that steer the partnership's work. They have complementary roles that ensure the success of each project. BNDES contributed with a substantial portion of the resources available, and IFC
has been acting as the lead advisor in transactions, with BNDES co-leading certain projects. The execution of new projects under the PSPInfra umbrella may adopt different formats. Said projects can either be led by IFC or have the shared leadership of IFC and IDB and/or BNDES.
Stay Connected
www.ifc.org/lac
www.twitter.com/IFC_LAC
www.linkedin.com/company/ifc-américa-latina-y-el-caribe
www.facebook.com/IFCwbg
www.instagram.com/ifc_org/
www.youtube.com/IFCvideocasts
www.twitter.com/IFC_org
www.ifc.org/SocialMediaIndex
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