São Paulo state highway concessions attract interest from foreign investors

Improved project financing conditions and documentation published in English and Portuguese broaden interest in the projects. Investment has totaled BRL 8.9 billion in two lots whose bid rules have been published

Two lots of highways in São Paulo state whose bid rules have been already published have attracted interest from European and Asian investors. As part of the concession process entailing investments of BRLBRL 8.9 billion, ARTESP  made available an unprecedented bilingual (English and Portuguese) data room, providing all the information about the auction as well as documents, data collection and studies. About 140 potential investors from Brazil, Spain, Portugal, Italy, Franca, China, South Korea and the Middle East have registered in the data room since November. The two concessions under way take in a total of 1,290 kilometers of highways.  
 
It is the first time that such a volume of information has been made available to enable investors to make better-grounded proposals. In addition, in this concession round, the Government has sought to improve projects' financing terms. Contractual innovations have been adopted in order to allow various investor profiles to take part and to encourage the participation of international companies.  
 
One of the new features in the model is the Tripartite Contract, to be signed by the Granting Authority, the concessionaire and the financier. This leverages project funding and clarifies the financier's step in rules, if necessary, among other issues. It is also the first time that these contracts have included a contractual exchange rate protection mechanism that can be triggered for investors using resources from abroad. Finance is also available from Brazil's state-owned development bank, BNDES and IFC, a member of the World Bank Group. The auctions will be held at BM&FBOVESPA as of February 22. Bidding is open to Brazilian and international companies, investment funds and pension funds, among others - alone or in a consortium. The winning bids will be those with highest fixed concession values. Below, details of the two concessions currently underway.
 
São Paulo Mid-West Roads (Florínia-Igarapava)

Approximately 570 kilometers of highways in the regions of Araraquara, Barretos, Bauru, Franca, Marília and Ribeirão Preto. The bid notice was published on 11/5/2016 and the deadline for proposals is February 22, 2017. Sections of seven highways integrate the network: SP 266, SP 294, SP 322, SP 328, SP 330, SP 333 and SP 351. The estimated investment is BRLBRL 3.9 billion over the 30 years of the concession, with about BRL 1 billion being in major expansion, BRL 1.8 billion in highway maintenance, BRLBRL 516 million in equipment and systems, and other investments.  
 
Roads of the Shoes Industry (Itaporanga - Franca)

The concession takes in 720 kilometers of ten highway sections: SP-255, SP-249, SP-257, SP-281, SP-304, SP-318, SP-328, SP-330, SP-334 and SP-345. The network runs through 35 municipalities in Bauru, Franca, Itapeva, Ribeirão Preto, Sorocaba and the Center region. The bid notice was published on December 22 and the deadline for proposals is April 25, 2017.  
 
The project includes BRL 5 billion in investments over the 30 years of the concession. Of this total, BRL 1 billion is for major expansion of the road network, BRL 2.4 billion is for maintenance, equipment and systems, as well as other improvements to the lanes. Most of the investment will have to be made in the first ten years of the contract.
 
The Best Highways in the Country

Currently, the network under concession in the State of São Paulo runs for 6,900 kilometers, administered by 20 concessionaires. According to the CNT/2016 survey, the 19 best highways in Brazil are managed by the São Paulo State Highway Concession Program. Between 1998 and 2016 these roads had around BRL 89 billion invested in them, in construction, operation and maintenance, providing greater security for users and boosting the development of the State with improvements to highway infrastructure.

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