Brazil's Quadra Capital triumphs in auction for Codesa port concession

Brazilian asset management company Quadra Capital emerged as the winner in the auction for the concession of Espírito Santo state port operator Codesa, in what turned out to be a battle between two investment funds.

In a process lasting around an hour, with various offers being made, Quadra Capital finally outbid investment fund Vinci Partners, offering a fee of 106mn reais (US$22mn) to the government, compared with the 101mn-real offer made by Vinci. 

"What was striking in this port auction was that two investment funds were disputing the asset and they were very interested in assuming the asset with various proposals," Camilla Affonso, a partner at infrastructure and investment consultancy Leggio Consultoria, told BNamericas. 

"This is likely to show other participants in the port sector that the segment's assets are very attractive and that the upcoming auctions may be processes that involve more diversified stakeholders, not just investment funds," she added. 

The firm is expected to invest 335mn reais and spend 1bn reais on operating expenses. The 35-year contract includes the port administration and indirect operation of the Vitoria and Barra do Riacho port facilities. It can be extended by five years if additional investments are required.

The government plans to use Codesa as a benchmark for other concessions in the sector this year, including Itajaí port in Santa Catarina state, and São Sebastião port and Santos port authority (SPA) in São Paulo state. The SPA concession is expected to attract the most attention, as it runs South America's busiest port.

"Today we're starting with Espirito Santo ports, and then we will have several others in the coming months," said infrastructure minister Tarcísio Gomes de Freitas after the auction. 

"Based on the interest we saw during the roadshow we did outside the country with potential investors, mainly regarding Santos port, I can say that Santos will be a transformative auction, due to the financial volumes involved. After these auctions that are already structured, we will likely have many other ports, in Bahia, in Rio de Janeiro," the official added.

MINISTER QUITS 

The Codesa auction also involved an important political element, as Gomes de Freitas confirmed that he would resign from his ministerial post in the next few hours, enabling him to run as a candidate for the governorship of São Paulo state in the October elections. 

Under electoral rules, any candidates standing for election, other than the president, are obliged to quit their public posts by April 2 in order to be eligible.

"Today the auction marks a new cycle of investments for the port sector and the end of my cycle in the federal government. But I'm sure that the good work will continue with the great team that we have at the ministry and also with the highly competent [deputy infrastructure minister] Marcelo Sampaio replacing me," said Freitas.

The departure of Freitas is not expected to lead to any major changes in the planned concessions of highways, ports, railways in the coming months, but it could result in certain delays. 

"Tarcisio de Freitas had significant stature and his departure could weaken some political discussions related to concessions because, in an election year like this one, there is more complexity involved, but we have to wait and see if his departure will impact the concessions agenda," said Leggio partner Affonso.