Brazil Business

BRAZIL RAISES $1.2 BILLION WITH AIRPORT CONCESSIONS

The result exceeded the government's expectations. Fraport was the biggest winner of the day

By
Brasilia airport bombing Brazil terrorism airport concessions

Three European groups have won the bid to control four major airports in Brazil. The airport concessions in Fortaleza, Florianópolis, Salvador, and Porto Alegre were the first step of the government’s privatization plan to boost the economy and measure the interest of foreign investors in Brazil.

While only three groups took part in the bidding, the result was an overall success. Brazil raised $1.2 billion (3.7 billion BRL) – 23 percent more than the initial projection.

According to the Brazilian lawyer Massami Uyeda, who spoke with newspaper O Globo, the mere fact that there were bidders for all assets is already positive. Uyeda told the paper that investors remain skeptical about Brazil due to its bureaucracy and political instability.

Germany’s Fraport was the winner of the day. It won the concessions for Fortaleza and Porto Alegre. Both deals were worth $253 million (785 million BRL) combined. For the Porto Alegre terminal, Fraport paid 837 percent more than the initial price.

The company expects that both airports will add an overall $375.8 million (1.1 billion BRL) to its core earnings in the first five years of operations.

The Fortaleza airport was one of the most attractive assets. Located in Northeastern Brazil, it has the potential of becoming a major hub between Brazil and the Northern Hemisphere.

France’s Vinci group snatched Salvador’s airport for $213 million (660.9 million BRL), the biggest deal of the day. However, it was the sole bidder. Zurich Airport, on the other hand, received the least attractive deal: the Florianópolis airport for $26 million (83 million BRL).

Privatizations

Last week, the government announced a 5-year concession and privatizations plan. President Michel Temer said that the 69 projects will bring $15bn in investments. However, only 38% of this is “new money.” Meaning: the other 62% were already budgeted. The majority of investments will be executed only after 2018 – that is, after the end of Temer’s term.