“What a client; what a sponsor” gushes a senior project banker in New York, describing the consensus choice for LatinFinance’s inaugural award for Best Project Sponsor.
It is not just this firm’s know-how in accessing financing that makes Odebrecht stand out. At the heart of its attractiveness to clients and project bankers is its proficiency as an engineering firm, and at the planning and bidding stage.
“We are always recognized as a company that can deliver for governments and its clients,” says Jayme Fonseca, head of finance at the Latin America infrastructure division in the group’s engineering and construction business, Construtora Norberto Odebrecht (CNO).
One element in Odebrecht’s success in the region, says Fonseca, is making local employees responsible for building relationships and making decisions locally. He says it makes the firm better able to make the right choices, quickly: partly because the person deciding is the one with the most information.
“Our business is much local than international,” he says.
The diffusion of Odebrecht’s activities in Latin American infrastructure is unparalleled. With the majority of operations centered in Latin America and to a lesser extent Africa, the home market of Brazil now only makes up around a third of CNO’s business.
Odebrecht has operations across most of Latin America, and its long history in countries such as Colombia, Mexico, Panama and Peru is good news for the firm when these states hold such good opportunities for infrastructure firms (Odebrecht’s Panama operation, 12 years old, is the youngest of these four).
The group’s revenues have consistently grown over the past five years, rising 16% in 2013 to 96 billion reais ($41 billion), with net profit at 491 million reais. With so much going on, Odebrecht has had to develop effective ways to avoid overleveraging and exhausting facilities with its banks.
One way it does this is by separating the construction and engineering parts of the business from the divisions that hold equity in projects. Furthermore, the projects that Odebrecht sponsors are notable for tapping different sources of funding.
An example is the Chaglla hydroelectric project in Peru, winner of Best Power Financing and Best Renewable Energy Financing. It was a rare occasion when the Inter-American Development Bank and Brazil’s state development bank, BNDES, worked together on a cross-border deal.
Odebrecht Oil and Gas’ sale of a $1.69 billion 144A/Reg S note, guaranteed by drillships, in July 2013 and re-tapped for $580 million in February, was also a project financing landmark for the capital markets. The instrument is one of the largest project bonds ever, globally, and freed up capital for the expanding oil and gas business. LF