São Paulo, Brazil, May 17, 2023—Capital markets are playing an increasing role in expanding access to long-term local currency funding for infrastructure projects in Brazil, helping to close the financing gap and improve the quality of infrastructure services in the country.
IFC is investing up to BRL780 million (equivalent to circa $150 million) in a new infrastructure debt fund managed by Patria Investimentos, a leading independent investment firm in Latin America, to help enhance Brazil's competitiveness by supporting critical infrastructure investments while also helping boost capital markets development.
As an anchor investor of Patria Infra FIDC1, IFC will also help mobilize investments from institutional investors. The fund will have a target size of BRL5 billion and invest on infrastructure projects in sectors that are key to boost economic growth in Brazil.
The fund will also help tackle climate issues, as it will focus on solutions and technologies that mitigate emissions in sectors such as renewable energy, digital infrastructure, transport, waste management, and water & sanitation. Patria Infra FIDC will contribute to addressing the gender gap in infrastructure projects as it aims at including in its portfolio at least 20 percent of projects or companies with female participation.
"Brazil is embracing local capital markets instruments to attract private investments. IFC's investment in Patria Investimentos' new debt fund will contribute to increasing access and improving the quality of infrastructure services through private sector participation in capital markets, which is essential for economic growth in the context of limited fiscal space for public investments," said Carlos Leiria Pinto, IFC Brazil Country Manager.
Despite recent progress, the quality of infrastructure remains a key deterrent to Brazil's economic growth, with the country ranking 50th out of 160 economies in terms of quality of infrastructure, according to the World Bank Logistics Performance Index, 2018-19. The private sector plays a key role in developing critical infrastructure but faces challenges accessing long-term debt finance.
Patria Investimentos is an experienced Brazilian fund manager with over US$26.5 billion equivalent of assets under management, and it has a long-standing relationship with IFC, which includes debt facilities and equity investments.
1 Fundo de Investimentos em Direitos Creditórios, or FIDC, is a type of receivable investment fund used for securitization purposes; it is regulated by the Brazilian National Monetary Council and the Brazilian Securities and Exchange Commissions.
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 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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