Brazil
Analysis

Is the Santos port privatization still realistic?

Bnamericas Published: Wednesday, May 06, 2020
Is the Santos port privatization still realistic?

As part of plans to privatize Santos port, which handles 28% of Brazil's cargo trade and is South America's busiest, the government has formalized the involvement of development bank BNDES to select the best model. 

This process should be finished in 1H21, after which the legally required public hearings can start, according to BNDES.

"The privatization of the Santos port, due to its importance in our trade balance, will be a milestone for the sector and for the recovery of the economy,” BNDES president Gustavo Montezano said.

But the privatization won't be straightforward.

“Without a doubt, Santos port is a highly interesting opportunity for investors, because the port has a direct, strong link with the agricultural and iron ore activities of Brazil, segments where Brazil is considered a global powerhouse,” Clovis Meurer, founder of private equity and venture capital association ABVCAP, told BNamericas.

“In normal times, this kind of asset would attract different kinds of global investors, including ports operators, private equities, pension funds, among others, but we need to observe that Brazil is facing not only the health and economic crises caused by coronavirus; we are also facing a turbulent political scenario,” Meurer added.

High diversification, handling cargo from, among others, the agriculture, fuel and industrial goods sectors, makes the port resilient in times of economic upheaval and therefore attractive for investors.

In the first quarter, Santos port handled the record cargo amount of 31.6Mt, up 1.4% from the same period of 2019, when the previous record was set.

Especially soy and sugar exports have boosted port activity while the sector generally has been less affected by the coronavirus spread.

São Sebastião port, in São Paulo state, is also on the privatization agenda, which the government advances amid a tense economic scenario and empty public coffers.

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