Financing has long been a challenge for infrastructure projects in Brazil. But after years of testing different models, it is getting easier to raise funds. This bodes well for keeping up with demand and developing the country’s huge resources.

The Port of Açu, between the cities of Rio de Janeiro and Vitória, is the largest deep-water and private port complex in Brazil – and Latin America. Stretching over 22,000 acres, the port is strategically located near the Campos Basin, a huge source of oil that has attracted big business for shipping oil and natural gas. The shipment of iron ore and other minerals from nearby Minas Gerais, the country’s largest mining state, is also on the rise from the port.

This is just the start. Demand for services at the port is expected to grow.

“It is still a port under development” says Vinicius Patel, chief operating officer of Prumo Logística, which has been managing the port and the adjacent Caruara Reserve, a vast and highly threatened coastal ecosystem, since 2014.

Indeed, the port has attracted 21 partners with plans to expand capacity to meet rising demand, led not only by oil and gas but also for products that will be key for the energy transition to net-zero carbon dioxide emissions by 2050. British oil company BP and mining concern Anglo American, as well as SPIC Brasil, a local power generation company owned by China Power Investment Corporation, are diversifying into energy transition activities, and this is expected to increase use of the Port of Açu for years to come to ship hot briquetted iron and green hydrogen, as well as to service what is expected to be a huge offshore wind energy industry.

The question now is how to finance expansions to the port – and the rest of the country’s infrastructure – to keep pace with the demand.

It can be hard to come up with the financing for infrastructure projects, says Rogério Zampronha, Prumo’s CEO.

“If a project brings good return, it is very easy to attract capital in Brazil or from abroad. Some of our projects are low-risks projects and can be implemented within a short period of time, with very solid off-takers. In this case, it is very easy,” he says. “Others are more transformational, and they are more long-term projects, so they are more difficult. There is a bit of everything.”

What is certain is that huge amounts of financing are needed to keep up with infrastructure demand in Brazil, and therein lies the biggest challenge.

“Brazil typically invests 2% of GDP per year in infrastructure, but the demand is twice as high,” says Claudio Frischtak, founding partner of Rio de Janeiro-based infrastructure consultancy Inter.B. “Investment could be expanded from 1.95% of GDP to 4% of GDP. But there is a financing problem. The gap amounts to BRL200 billion ($50 billion).”

If a project brings good return, it is very easy to attract capital in Brazil or from abroad.  Rogério Zampronha, CEO, Prumo Logística

Brazil’s frequent fiscal and financial crises have frustrated efforts to modernize infrastructure and address logistics bottlenecks for decades.

A brighter outlook

In spite of these challenges, there is a sense of growing optimism among infrastructure investors in Brazil that conditions are improving so that more investors – and financing – can flow in to fill the gaps.

“The needs are so great that there is room for everybody,” says Carolina Rocha, COO of Perfin, a Brazilian investment firm in São Paulo’s financial district of Faria Lima.

Perfin has won three toll road concessions in the state of Minas Gerais in a consortium with Brazilian infrastructure company Equipav. The firm has raised a total of BRL2.5 billion in two rounds since 2020 to invest in roads as well as water and water management.

“We already have funds. We felt it was a good moment to invest in the first half of the year. It is an opportunity to increase investment in infrastructure,” Rocha says. “But we have had a very positive long-term perspective. Indeed, we are going to enter a very positive period.”

Carolina Rocha, COO, Perfin

Brazil’s improving macroeconomic environment has contributed to this new sense of optimism. The Brazilian central bank cut its benchmark rate for the second consecutive time to 12.75% in September after keeping it at 13.75% since late-2022 to fight inflation. More cuts are expected. At the same time, the national government has unveiled a new program known as PAC to accelerate economic growth. The program calls for investing a whopping BRL1.7 trillion in infrastructure, health and education, among other things.

“It is a very positive moment thanks to the combination of falling interest rates and the government focus on infrastructure,” Rocha says. “The decline in interest rates has undoubtedly given a boost to investors. And there are more concessions to be auctioned.”


The huge investment plan means that multiple financing models will be used, from public funds to public-private partnerships (PPP).

Jerônimo Rodrigues, governor of Bahia, says the northeastern state is looking at multiple fronts for financing. “We have … public funds coming from the federal budget, funds from state-controlled banks and private funds. And naturally I also see the PPP model with a great deal of sympathy,” he says.

Public banks and state-owned companies are expected to invest BRL343 billion. The Brazilian development bank BNDES itself is due to inject BRL270 billion, says its president, Aloizio Mercadante.

Once criticized for crowding out the market, BNDES is now praised by investors for its role in infrastructure.

“Sometimes they act as a safe haven to finance certain projects,” says Thiago Sendelbach, BNP Paribas’ director of energy resources and infrastructure. “They made clear they want to be more co-lenders to share the risk with the private sector. Again, needs are so huge that there is room for everybody.”

Progress can be seen in previous deals, such as when BNP advised Spain’s Acciona on a BRL6 billion subway train project last year, Sendelbach says. “It was a landmark deal because BNDES accepted to take project finance risk during the construction period, which is not usual for BNDES,” he says.

Sendelbach also emphasizes the solid growth of the local infrastructure bond market, which offers income tax exemptions, as a good source of financing in recent years.

What’s more, BNDES started to use non-recourse financing lines last year in project finance, a type of commercial lending that entitles the lender to repayment only from the profits of the project funded by the loan and not from any other assets of the borrower.

This move has drawn praise from the infrastructure sector.

“Non-recourse financing lines are fundamental for the development of the infrastructure market in Brazil, considering the volume of investments that are needed in all sectors and that the availability of capital and balance sheet of the players operating in the country is finite,” says Mauro Dias, president of logistics company GLP Brasil, which has its own investment vehicle called GLP Capital Partners.

“It is this project finance non-recourse modeling that allows investment fund managers such as GLP Capital Partners [to] invest in infrastructure projects in the country,” Dias says.

Perfin’s Rocha also exalts BNDES.

“The role of the government is positive with BNDES coming back to support the sector,” Rocha says. “It is all mapped with very clear projects and objectives. Support coming from public sector banks, especially BNDES, turns out to be an ally. It has an important role to play.”

Learning from past mistakes

It’s not been so straightforward to make these improvements or draw applause from investors. But the fact that this is happening shows that the government has been learning from past mistakes, Rocha says.

Indeed, this is the third version of PAC. The first edition was launched by President Luiz Inácio Lula da Silva during his first presidential term in 2007, and the second one was launched by his successor, Dilma Rousseff, three years later. There is still a lot of unfinished business, and some projects have been stalled due to inadequacies, especially in railway projects, or corruption among infrastructure companies.

“This is a point of attention. There used to be more infrastructure companies with financial strength available to tackle these massive infra projects,” BNP Paribas’ Sendelbach says.

“It is like readjusting to a new scenario,” he says. “Perhaps we do not have as many companies, but again, they are adjusting, and we now see more consortiums to take on these massive projects. The market has been adjusting to a new reality. It is improving.” LF

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