Brazil Sells 3 Airports for US$ 14.3 Billion, 4 Times Over the Asked Price

Airports privatization For the Brazilian government the privatization of three airports turned into a more than pleasant surprise. The auction for the airport terminals in Guarulhos (São Paulo), Campinas, (interior of São Paulo), and Brazilian capital Brasília at the São Paulo Stock Exchange (Bovespa), ended with winning proposals totalling over R$ 24.5 billion (US$ 14.3 billion).

The value represents a surcharge of 348% over the value stipulated by the government.

The concession in Guarulhos, the busiest terminal in Brazil, was granted to the Invepar-ACSA consortium, which includes the Brazilian Invepar (90%) – an association between construction company OAS and civil servant pension funds – and Airports Company South Africa (10%), which offered R$ 16.213 billion for the operation.

The total should be paid to the government in annual instalments over a period of 20 years, the period of the contract.

Viracopos, in Campinas, went to the Aeroportos Brasil consortium, established by the Brazilian Triunfo Participações e Investimentos (45%), UTC Participações (45%) and the French Egis Airport Operation (10%), which will pay R$ 3.8 billion (US$ 2.2 billion). The concession will be for 30 years.

Brasília Airport was the only one auctioned in open outcry, as in the other two cases no other company offered more than the proposals presented by the winners early on in the process.

Inframerica Aeroportos, established by the Brazilian Infravix (50%) and by the Argentine Corporacion America (50%), won with little over R$ 4.5 billion (US$ 2.6 billion), after a dispute with Operadora Brasileira de Aeroportos (OBA), which includes the Spanish OHL and AENA Desarollo Internacional.

The duration of the contract is 25 years. In August 2011, Inframerica was the winner of the auction of São Gonçalo do Amarante airport, in Rio Grande do Norte, the first promoted by the federal government of Brazil.

The three values paid exceed the minimum established by the government by 373% in the case of Guarulhos, 159% in Campinas and 675% in Brasília. In all, 11 consortiums participated in the auction.

The minister of the Civil Aviation Secretariat (SAC), Wagner Bittencourt, qualified the result as “very expressive”, in a press conference promoted after the auction. “We continue with positive signs that the country is a place in which investment is safe and profitable,” he said. “We had very aggressive bids right from the start, which shows the appetite of participants,” he added.

The start of transition of management of the terminals to the concession holders is scheduled to take place in May, and the process should take six months, extensible for another six. The consortia will have to establish specific purpose societies to control the airports, which will have a 49% share belonging to the Brazilian Airport Infrastructure Company (Infraero), the state-owned company that is the current operator. The company, however, will participate in the profits, but not in management, according to the government.

The concession holders will have to invest in expansion of the airports. The value forecasted for investment in Guarulhos is R$ 4.6 billion (US$ 2.7 billion), with R$ 1.38 billion (US$ 803 million) before the 2014 World Cup, to take place in the country.

In Brasília, the total is R$ 2.8 billion (US$ 1.6 billion), with R$ 626.53 million (US$ 364.6 million) up to the World Cup. In the case of Campinas, total estimated investment is R$ 8.7 billion (US$ 5.1 billion), being R$ 873.05 million (US$ 508.1 million) before the World Cup.

The final value forecasted for Campinas is greater because, according to Bittencourt, the airport may become the largest in Brazil in the long term, with capacity for 90 million passengers a year and four runways in operation.

In the medium term, the total to be invested in Guarulhos is greater because the airport is currently the busiest, with around 30 million passengers a year and is already crowded.

In the works for the Cup, the consortia aim to use financing by the Brazilian Development Bank (BNDES).

During the auction, there was a protest by union leaders in front of the Bovespa. They carried Brazilian and National Airport Worker’s Union flags and those of union groups, especially the Central Worker’s Union.

The protesters screamed against privatisations and the BNDES’ financing of investment by the consortia, as it is a state-owned bank. With the end of Infraero control over airports, there are fears of unemployment in the category, something that the government denies.

Anba

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