Market expects the five scheduled auctions to attract at least one offer each
08/06/2024
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Viviane Esse — Foto: Gesival Nogueira Kebec/Valor
The highway concessions segment will see a series of large auctions in the second half of the year. At least five tenders by the São Paulo state and the federal government are planned and could total R$32.3 billion in investments. In addition to these, eight other projects could be launched in 2024, apart from the renegotiation of concessions, according to the Ministry of Transportation.
In the market, the main doubt regards the possibility of attracting investors in a scenario of high interest rates and with concessionaires already committed to investments in ongoing contracts. However, according to governments and analysts interviewed by Valor, at least the auctions that have already been scheduled are expected to attract proposals.
Even the concession of BR-381 in Minas Gerais, known as the “Road of Death,” is expected to attract interest. Following changes in the project, which mitigated geological and expropriation risks and increased the rate of return, the expectation is that the auction will attract at least one group.
“There have been four attempts to bid. Now it’s for real,” said Viviane Esse, national secretary of Road Transportation. According to her, there are a host of companies analyzing the project, at least three with a background in the construction sector, in addition to traditional highway concessionaires. One is J. Malucelli, according to a source. When contacted, the company said it uses its “structure and experience” in the construction and highway segment “to study the programs announced by the government.”
For Ms. Esse, the broad market interest has grown. “I see increased participation. That became clear in the BR-040 auction, which attracted four bidders. We have seen many groups studying it.”
For Rafael Benini, São Paulo’s secretary of investment partnerships, the size of the contracts helps attract interested parties. “I understand there is concern [about a lack of proponents] but the size of projects was reduced. Two years ago, there were auctions worth R$15 billion, like the Dutra highway. Now we have [projects of] R$7 billion, R$8 billion,” he points out.
The two São Paulo state auctions scheduled for this year—the Sorocabana and Nova Raposo lots—are seen as highlights. The bids will take place as a result of the approaching expiration of the ViaOeste concession, by CCR. They are considered attractive because traffic on the roads is known and tolls are already in operation.
According to Mr. Benini, Sorocabana is a traditional lot, which tends to attract well-known concessionaires. Nova Raposo, on the other hand, includes urban construction work, which will require complex expropriations, and therefore tends to attract groups in the construction segment.
Sorocabana has been studied by CCR, Pátria, Ecorodovias, EPR, and Via Appia (by Starboard). Nova Raposo has been evaluated by groups such as Acciona, CDL (Consladel), Via Appia, and a consortium comprising CCR and construction companies.
Via Appia says it is studying the projects but has not yet made a decision, according to CEO Brendon Ramos. The two blocks have their challenges but also synergies with concessions that the company already operates, he points out. When contacted, CCR said, “The auction pipeline is extensive and the company has carried out in-depth assessments.” EPR says it “has a habit of evaluating opportunities.” Ecorodovias said it continues to analyze projects “selectively, looking for opportunities with an attractive rate of return.” Pátria and CDL declined to comment.
The São Paulo state government has other projects underway, which will likely be scheduled for 2025. In the first half of the year, a concession for the Paranapanema lot (Raposo Tavares highway between Itapetininga and Ourinhos) should be tendered, with investments of R$2.5 billion to R$4 billion. In the second half of the year, the Mogiana and Circuito das Águas blocks should be tendered, as a result of the expiration of the Renovias concession. As with ViaOeste, the state will likely split the concession in two and incorporate new road stretches into each lot.
Other federal government auctions are scheduled for this year, including the Rota dos Cristais (BR-040 between Minas Gerais and Goiás) and the BR-262 in Minas Gerais. They are regarded as challenging projects but there is interest.
“The best stretch of BR-040 has been tendered and was taken by EPR. The other two lots are considered complex projects. However, EPR tends to be a proponent,” said Massami Uyeda Junior, a partner at Arap, Nishi & Uyeda.
Marco Aurélio de Barcelos, president of ABCR (Brazilian Association of Highway Concessionaires), said there has been progress in federal projects, with an increase in return rates and greater risk sharing in challenging projects. “The government did its job to increase attractiveness. The IRR [internal rate of return] became more attractive as the final model has resolved risks.”
As projects progress, the general perception in the market is that new players are increasingly entering the sector. “We have been approached by companies from abroad which are interested in learning about the concession environment. We have seen moves,” said Mr. Barcelos.
Rodrigo Campos, a partner at the Vernalha Pereira law firm, expects to see offers for all scheduled auctions. “We won’t see many bidders as the projects are many and with different profiles. However, I believe all projects will attract interest, including the BR-381.”
Letícia Queiroz, a partner at Queiroz Maluf Advogados, also sees interest in the sector but points out that there are challenges, mostly related to funding and hiring engineering work. Furthermore, she points out that auctions will likely occur simultaneously with the renegotiation of troubled concessions. “The pipeline will coincide with the number of contracts being renegotiated which are also expected to generate new investments. It’s a challenging calendar, with a lot of auctions, but I see moves in the market.”
*Por Taís Hirata — São Paulo
Source: Valor International