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UPDATE 2-Brazil's Mato Grosso lures UAE investors for road projects
October 31, 2017 / 3:40 PM / 18 days ago

UPDATE 2-Brazil's Mato Grosso lures UAE investors for road projects

(adds ambassadors’ quote, names of potential bidders, byline)

By Ana Mano

SAO PAULO, Oct 31 (Reuters) - Brazil’s Mato Grosso state hopes to persuade funds and companies from the United Arab Emirates to invest in infrastructure projects, Governor Pedro Taques said on Tuesday at the launch of a program to grant licenses to build and operate roads there.

Taques was addressing potential investors in São Paulo, including executives at trading firms such as Cargill Inc, as the state launched a road show to promote the projects.

United Arab Emirates firms could participate in the ventures, in partnership with local companies, and bid with them in upcoming license auctions, said Marcelo Duarte, the state’s infrastructure secretary. Representatives for UAE investors recently spent days in Mato Grosso looking at investment opportunities, he said.

“UAE is very interested in building a strategic partnership with Brazil, especially in the agriculture sector,” Ambassador to Brazil Hafsa Al Ulama told Reuters. UAE is a large consumer of agricultural products and a global hub of trade, she said.

Mato Grosso hopes to attract around $458 million in private investments in the first phase of the road development program. Initially three contracts will be awarded to operate stretches totaling 525 kilometers (326 miles). The first licenses will have a duration of 30 years.

Mato Grosso believes mid-sized Brazilian construction firms and local funds will also seek to take stakes in the consortia that will bid to operate roads in the state, where some 60 million tonnes of grains are produced every year.

In prior bidding processes, only large Brazilian construction companies were inclined to engage, using funding from development bank BNDES, Duarte said. With the Lava Jato corruption probe ensnaring most of the big players, the profile of the investors within the bidding groups is likely to change, he added.

“We are offering rates of return above the Selic base rate so that the projects can be funded at market rates. These projects do not need subsidized interest rates to be carried out,” the secretary said.

The estimated internal rate of return of the projects is 9.8 percent, Mato Grosso said.

Bidding rules for the first phase of the road program will be published next month while the auction of the initial three contracts should be in December.

Mato Grosso officials were scheduled to meet with 12 potential bidders on Tuesday, including Odebrecht SA, Investimentos e Participações em Infraestrutura SA (Invepar), Pátria Investimentos, and Systra Vetec, according to a roster seen by Reuters.

None immediately responded to a comment request. (Reporting by Ana Mano; Editing by Phil Berlowitz and David Gregorio)

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