São Paulo, Brazil, May 2020— On
May 15th, 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.
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
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.