How Brazil’s Kinea will invest in infrastructure sector through new fund

Kinea Investimentos, the private equity and asset management firm controlled by Brazilian banking giant Itaú Unibanco, is in the process of raising a new fund to acquire minority stakes in infrastructure companies. 

The plan is to raise up to 2bn reais (US$400mn) by the end of this year, with a significant contribution from federal development bank BNDES.

Aymar Almeida, a Kinea partner and the manager responsible for the infrastructure fund, talks with BNamericas about the investment strategy and the sectors of interest.

BNamericas: How much does Kinea currently have under management and how much of that is dedicated to the infrastructure area?

Almeida: We currently have 99bn reais under management and we have several divisions here within the company, divided into the areas of credit, agricultural credit, real estate assets, debentures [local bonds], and the infrastructure area.

BNamericas: What are your plans for the new infrastructure fund?

Almeida: Since 2019, we have had a private equity area at Kinea and we decided with this new fund, which is in the fundraising phase, to use the resources to buy stakes in companies. During our history we have invested Kinea's own money into firms, and we now feel comfortable investing in companies with resources from this fund.

BNamericas: How much is being raised for the new fund?

Almeida: In 2022, BNDES held a public call where it committed to invest up to 500mn reais in selected funds investing in infrastructure.

We were one of those selected, and in practice for every three reais that we will raise and invest, BNDES will inject one real into the fund.

By year-end we must complete the fundraising, which will likely be between 1.3bn reais and 2bn reais. BNDES will be a minority shareholder in the fund but a key shareholder.

BNamericas: In which areas are you looking to invest?

Almeida: Infrastructure is very diverse, and we will take a qualitative approach.

We have invested in the electric power sector since 2017 and we like the areas of transmission and generation of renewable energy.

Another sector we like is sanitation. In the sanitation area we already have knowledge, we are part of the consortium that won the privatization of Corsan, the water firm in Rio Grande do Sul [state].

Although I mention these areas, we do not have any restrictions for other segments such as ports, airports and highways, but this will be assessed on a case-by-case basis.

BNamericas: What will the average investment be?

Almeida: Our focus is always to be a minority shareholder, which is why we look at strategic operators in the sectors that interest us.

An important point that we also consider before making the investment is the exit strategy.

This fund that we are raising will have a period of 12 years for divestment, but we will also consider divestment strategies of between seven and 10 years.

The average investment ticket in these operations will be between 200mn reais and 500mn reais. Just to give you an idea, in Corsan our investment was around 200mn reais.

BNamericas: What is your current perception as an infrastructure investor in Brazil?

Almeida: I see a favorable scenario because even with changes in government, there is stability in terms of contracts.

That said, our investment focus is 100% on Brazil because we believe there is still a lot to be done in the country’s infrastructure sector.