For the future of companies dedicated to infrastructure in Latin America, 2007 was a key year. The governments of the region have shown a clear willingness to diminish the enormous logistical gap that separates Latin America from other emerging economies, such as Asia, and have advanced in the implementation of ambitious programs including the multimillion dollar National Infrastructure Plan launched by Mexico’s government, the concession of new highways in Brazil and the modernization of several ports. The sector is buzzing.
This increased dynamism in awarding works and concessions is clearly refl ected in this 2008 ranking of companies that stand out in the infrastructure sector, whose project portfolios are notably larger than they were last year. This has consolidated the likes of Odebrecht, ICA and OHL, who are already well-known in this industry, and has allowed operators who had a more modest presence in the region, such as ICTSI, to grow. 2008 promises to be an active year for infrastructure.
OHL: BRAZILIAN BOOST
In last year’s TEN we noted the importance that Latin America, and especially Brazil, hold for this Spanish construction company. This has grown even more after OHL’s resounding triumph in the October 2007 bidding for 25-year concessions for federal highways in Brazil. OHL won fi ve of the seven sections offered, committing combined investment to the tune of US$3 billion for the fi rst fi ve years of the concession, and between US$1.5 billion and US$3 billion more in the remaining 20 years.
ICTSI: NEW KID ON THE BLOCK
In mid-2007 Philippine company International Container Terminal Services Inc. (ICTSI) started operations in the Ecuadorian port of Guayaquil, after signing a contract that brings a US$170 million investment over three years. With Guayaquil, the Philippine company incorporates its second port in Latin America - it operates Suape in Brazil’s northeastern state of Pernambuco - and also in 2007 acquired 70% of SPIA, which operates the port of Aguadulce that is being built across the bay from Buenaventura on Colombia’s Pacifi c coast. Latin America has thus accounted for a larger part of the company’s aggressive internationalization. strategy. International operations represented 54% of total income and 63% of net profi ts at the close of the third quarter of 2007.
ICA: RECOVERY IN PROGRESS
Mexico’s largest construction group is ICA, the only survivor of the 1990s golden age of large-scale construction fi rms in Mexico, the majority of which succumbed to excessive fi nancing that got out of hand because of the 1995 tequila crisis. The last 12 years have not been easy for ICA, but the outlook is promising. Its credit risk rating improved toward the end of last year, while this year the company has plans to carry out a US$550 million stock offering and compete for contracts worth US$20 billion.
CCR: USA AT LAST
In late 2007 Brazilian highway operator CCR made one of its most ambitious moves in getting a foothold in the US market. It was a small step, but a step nonetheless. With a 10% holding, CCR is a partner with Portuguese fi rm Brisa in the 99-year concession of the Northwest Parkway, which forms part of the Denver, Colorado beltway. The US concession is the fi rst step of an aggressive internationalization plan. Also in partnership with Brisa, the company is participating in the highway re-concession process taking place in Mexico, and has shown interest in projects in Chile, Costa Rica, the Dominican Republic and Puerto Rico.
SABESP: MULTINATIONAL WATER AND SEWERAGE
The Sao Paulo state water treatment company was legally authorized in 2007 to have overseas subsidiaries. Sabesp is one of the most effi cient water treatment companies in Latin America, and has showed its interest in selling services beyond Brazil. It provides services in 368 municipalities in Sao Paulo, serving 25 million people. Its third quarter 2007 net profi t was US$220 million, almost double that of the same period 2006..
MONTEVIDEO PORT: KEEPING AN EYE ON THE NEIGHBOR
Uruguay’s National Ports Administration is determined to move into the spaces its neighbor is leaving open on the other side of the Rio de la Plata, and secure more of the basin’s ever increasing cargo traffic for Montevideo. The numbers show that the Uruguayans are meeting their goals. In the first 10 months of 2007, the port of Montevideo registered a 28% increase in cargo management, 60% of which had Argentina as its fi nal destination. Congestion in the port of Buenos Aires and its high tariffs draw a favorable picture for Montevideo to become a regional port hub.
CORPORACIÓN AMÉRICA: PROYECTOS GRANDILOCUENTES
Corporacion America S.A. (Casa) is not exactly shy. While some years ago it was touted as the largest private airport operator in the world, it is now proposing a US$3 billion project to create a new trans-Andean train connecting Chile and Argentina. Many doubt the feasibility of a project of this magnitude, but Casa doesn’t live on dreams alone. The company owns 90% of Aeropuertos Argentinos, and ended 2007 on a high when in December it acquired 100% of the concessionaire of Uruguay’s Punta del Este airport. This new terminal is added to Casa’s share of operations of Montevideo’s Carrasco airport, the 32 airports it manages in Argentina, Guayaquil airport, one airport in Armenia, and a string of secondary airports it operates in Italy.
ODEBRECHT: STEADY PROGRESS
Latin America is starting to look like the promised land for construction and infrastructure operation companies. The healthy macroeconomic situation in most of the countries in the region is translating into investment plans to overcome the region’s serious infrastructure deficit. For Brazilian firm Odebrecht this has led to a bulging project portfolio that in mid-2007 totaled US$10 billion, more than double the level of December 2005.
HPH: DEEP WATERS
Hutchison Port Holdings, the largest port operator in the world, continues to grow in Latin America. HPH opened the expansion of the Lázaro Cárdenas container terminal in Mexico at end 2007, and also has the concession for Manta port in Ecuador, where investment plans reach US$468 million.
IDEAL: LEARNING CURVE
After a somewhat weak beginning (see page 32), Carlos Slim’s infrastructure company is beginning to gain strength. In August it won two hydroelectric projects in Panama worth US$250 million and heavy investments announced in Mexican infrastructure in the coming years are perfectly timed. Ideal is moving up its learning curve.
