Brazil asset manager 4UM wins concession for 'highway of death'

Brazilian asset manager 4UM won the auction for the concession of highway BR-381 in Minas Gerais state, which requires estimated investment of 9.3bn reais (US$1.65bn).

4UM, controlled by local families Malucelli, Salazar, Federmann and Backheuser, won after it offered a 0.94% discount on the tolls, defeating the other asset manager, Opportunity, which offered a discount of 0.10%.

"Today's auction marks a huge success because we are here with two new entrants in the road infrastructure area. This is our intention, to bring new entrants to the next highway auctions, not only the traditional companies that already operate in the road sector," transport minister Renan Filho said during the Thursday auction.

The 30-year concession contract comprises a 303km stretch between Minas Gerais state capital Belo Horizonte and the city of Governador Valadares. 

Last November, the federal government was forced to suspend the auction for the highway as no bids were submitted. Previous auctions for the same highway were also suspended in 2013 and 2022.

"It was challenging moving forward with this project and now we concluded the auction thanks to a series of changes we made to the original plan, removing sections of the original contract, as well as increasing the internal rate of return of the project," added Renan Filho.

BR-381 has long been known as the 'highway of death' due to the high number of accidents along the route and improved safety is a key part of the concession contract, as well as expanding traffic capacity.

On some sections of the highway the engineering challenges are considered major and there are also legal issues given the need to expropriate land where widening works are necessary. 

Of the 9.3bn reais expected to be invested in the highway over the length of the concession, 5.57bn are for capex and 3.68bn for opex. The main works are converting 90km into a divided highway and constructing 123km of additional lanes.

"We are committed to improving BR-381, and we want to change the name of this from 'highway of death' to 'highway of life', said Leonardo Boguszewski, president of 4UM.