CAF creates fund for Brazil's infra concessions

Latin American development bank CAF and Brazil's BNP Paribas Asset Management have created a 1bn-real (US$315mn) fund to help finance Brazil's infrastructure concessions through a new bond portfolio.

The two institutions will cover the first 10% of the required investment and then raise funding with the help of foreign investors such as pension and sovereign wealth funds, local paper Valor Econômico reported.

Besides counting on a bank with expertise in financing infrastructure projects, investors will benefit by receiving institutional support from a multilateral investment grade agency. The fund should kick off in the second half of 2017, according to CAF infrastructure advisor Victor Traverso.

"Obviously, it will help entrepreneurs build a financial structure that is less dependent on national development bank, BNDES," Traverso was quoted as saying in the report.

Luiz Eugenio Junqueira Figueiredo, who heads BNP Paribas' alternative investments division, added that foreign investors are hungry to inject funding into Brazil.

Although political stability and the economy still needs to be improved, "we're seeing a number of long-term investors from abroad with infrastructure as the focus of their applications," says Figueiredo.

UPCOMING CONCESSIONS

Concessions are planned for airports, highways, railways, port terminals, oil fields, electric energy and waterworks under the national infrastructure program Crescer.

The first tenders, which are expected to take place next quarter, include four airports, two port terminals and oil and energy projects. By the end of next year, tenders for highways, railways, waterworks and other oil and energy projects are also expected to be held.