Pátria sells 55% of Entrevias to French group but keeps interested in sector
Belen Marcos — Foto: Divulgação
The French group Vinci and the investment management company Pátria plan to continue expanding their operations in the Brazilian infrastructure market, according to Belen Marcos, global CEO of Vinci Highways, and Roberto Cerdeira, partner of the investment management company. The French company has just debuted in the highway sector in the country with the acquisition of 55% of Entrevias, a concession won by Pátria in 2017 that operates roads in the Central-West region of São Paulo.
The sale, whose value was not disclosed, will still go through approvals from authorities. It is expected to be completed within three to four months.
For Vinci, this is only the first step in the sector, which has been in the group’s planning for some time. For Pátria, the divestment does not mean an exit from the highway market.
The French group has been active in infrastructure in Brazil since 2017, when it won the concession for the Salvador airport. Since then, it has also won the auction of a regional block of airports in the North region in 2021.
“We have been looking at the Brazilian highway market for some time. Sometimes it is a matter of finding the right asset. When we started talking with Pátria, we realized that Entrevias could fit our requirements. It is a contract that is entering a moment of greater maturity, is well-operated, and has the appropriate size and remaining term. And São Paulo is a growing state, with a good history of concessions,” says the executive.
The company’s goal is to continue expanding in the country, both in airports and highways. “We will certainly look at new investments in Brazil. There is a big pipeline to come. It is a country that will have a lot of growth. When we go into a region, if we are comfortable working with it and if the project does well, in general, our goal is to have a long relationship with the country. We are long-term investors,” said Ms. Marcos.
She says, however, that for now there are no specific targets, and that everything will depend on the assets that come to the market. “At the moment, our focus will be to finalize the operation. It is too early to talk about future targets. We have to conclude this operation first.”
On Pátria’s side, the sale of Entrevias does not indicate that the company is not interested in the Brazilian highway market, said Mr. Cerdeira. “Divesting is part of our business. Whenever the asset is mature enough, we will evaluate it. In this case, we found a good partner, so we decided to do a partial sale,” he said.
According to him, in the short term, there is no discussion about selling the other road assets in Brazil — Cart (Concessionária Auto Raposo Tavares) and Eixo SP (which operates the Piracicaba-Panorama corridor). As for the other 45% stake in Entrevias, the partner also says that there is no decision made about keeping its share or leaving the business completely.
After winning the Eixo SP auction, in January 2020, with a fixed concession payment of R$1.1 billion — well above the second-largest bid — Pátria did not bid on new infrastructure projects in Brazil for almost two years. The pause was broken with a bid in the tender for Noroeste Paulista, last September, but the company did not win the asset.
“We never stopped studying. We analyzed 90% of the projects that came to the market during this period. We evaluated the regulation, the history of the assets, our capacity to be competitive in the auction,” he said. In addition, the management company won two major road contracts in Colombia in 2021 — one through acquisition and the other through bidding. “We’ve been doing quite a bit.”
Mr. Cerdeira says the plan is to keep competing for infrastructure auctions in Brazil. “We are analyzing most of the projects in the region, but the decision about whether or not to enter is made at the last minute,” he said.
Asked about the expectations with the new federal administration, the partner said that the group’s long-term vision does not change: “The regulation has been stable in the last years and in different administrations. We have already invested R$6.4 billion in highways in the country and we want to do more.”
Ms. Marcos, with Vinci, also downplayed the political risks. “We have seen changes in government in many countries and we always adapt. It’s part of doing business in infrastructure.”
Asked about the challenges of the Brazilian market to draw international investors, the executive mentions, besides the importance of political and regulatory stability, the size of the assets offered. “Sometimes the projects are very large. Entering any new infrastructure market is complicated. If the asset is very large or if there is a lot of construction to be done, it becomes more difficult for foreigners.”
In the case of Entrevias, this is a concession that manages 570 km of roads in São Paulo. The concession, signed in 2017, provided for R$3.9 billion in investments over the 30-year contract period. Today, more than 50% of the works have already been executed, according to Pátria.
In the year to September, the concessionaire reported gross revenues of R$633.6 million, a small increase of 0.77% compared to the same period in 2021. The adjusted EBITDA rose 32%, reaching R$296 million in the year. In the period, there was a loss of R$ 44 million.
*By Taís Hirata — São Paulo
Source: Valor International