Airports: New Brazilian airports auction attracts 20 companies

New airports auction attracts 20 companies

By Fabio Pupo | São Paulo

While the government is forced to cede in the concession model of other infrastructure auctions to attract more competition, private sector interest in airports continues to be strong. All eleven groups that competed in the last auction of the segment, in 2012, have representatives among companies interested in the new round of bidding. Altogether, at least 20 companies are reviewing the assets and talking behind the scenes to bid for Galeão, in Rio de Janeiro, and Confins, in the state of Minas Gerais, in the auction scheduled to take place in September. 

Valor has learned that ADC&HAS, an American airports operator, has partnered with Brazilian construction company Fidens to bid in the next round, repeating the consortium formed for the last auction – which finished in third place in the auction of Brasília's airport. Both companies want to bid for Confins and are also seeking a third partner with financial links.

Construction company Queiroz Galvão also plans to take part in the new round. Behind the scenes, it’s already known the company will again join Spain’s Ferrovial – which manages airports in the UK and several other global locations, and has decided to take part in this year bidding for Brazilian airports.

Italian toll giant Atlantia, which already has stakes in road concessions in Brazil, also wants to bid for Galeão and Confins, after the merger with local peer Gemina (which controls the Rome airport). The merger was authorized on Wednesday by Italian regulators. 

Germany’s Fraport and Brazil's EcoRodovias have also partnered. Another group on the loop, Odebrecht, will likely partner with Singapore’s Changi, although the Asian partner is still awaiting definitive rules to decide on its participation. CCR, which bid in the previous round with Swiss firm Flughafen Zürich, is searching for another partner, which must have experience managing more than 35 million passengers a year. CCR executives have met with National Civil Aviation Agency (Anac) officials to comment their interest in the project.

Carioca Engenharia and GP Investimentos have also formed a partnership with two foreigner operators: Schiphol, which manages the Amsterdam airport and Aéroports de Paris (ADP, which manages assets such as Charles de Gaulle and Orly). Rio de Janeiro’s Libra has also expressed a clear interest in bidding for airports. Asset management firm Advent is believed to be among competitors, but it declined to comment on the issue.

Generally, companies still say they are waiting for the final bidding documents to set their effective participation in the round. Groups, especially the smaller ones, have only one great fear about the rules: the minimum amount for bid awards – what the company pays for concessions rights. For these companies, if the government interferes too much in setting this value, the auction can cool off. Galeão is already widely expected to have a higher bid award than Guarulhos, the most sought after airport – the government asked for a minimum R$3.4 billion but the asset ended up drawing R$16 billion. Confins is expected to feature a similar minimum bid to estimates for Brasília's airport – with a price floor of R$582 million, it ended up being sold for R$4.5 billion.

The government has already announced stricter rules in relation to the last auction. Now, consortiums must be formed by an operator that manages an airport with at least 35 million passengers a year (experience that only foreigners have). In the last auction, this requirement was only of 5 million passengers a year. In addition, the operator must have at least a 25% stake in the partnership (before it was only 10%). These stricter rules have pleased especially larger groups, which were already in contact with major world operators. 

The fact that state-owned Infraero will remain as a partner of the airport, with a 49% stake of the concession, is now generally well accepted. The requirement was a cause of serious concerns at one point. Infraero will carry half of the investments made by the private sector, plus half of the bid award. Likewise, it will proportionally receive dividends generated by the winners. 

Companies interested in the bidding are worried with the possibility that the government will continue to ban winners of previous auctions from bidding in the next round. During the announcement of concessions for Galeão and Confins, president Dilma Rousseff confirmed the ban. The idea is fostering competition between privatized terminals. But as the veto involves pension funds (that won the control of Guarulhos through the Invepar consortium), the market still sees the possibility of some concession. Besides being typical long-term investors, the funds – Previ, Funcef and Petros - have close ties to the government.

Valor has learned that the three controlling groups of airports auctioned in 2012 – Invepar, Triunfo and Engevix – are eyeing Galeão and Confins, but await the government’s decision. Including the three winners so far, the auction already has 19 interested parties (Fidens, ADC&HAS, Queiroz Galvão, Ferrovial, Atlantia/Gemina, EcoRodovias, Fraport, Odebrecht, Changi, CCR, Carioca, GP, Schiphol, ADP, Libra and Advent, besides Invepar, Triunfo and Engevix). Onnly Atlantia and Gemina didn't take part in the last round.

Studies conducted by the government's Brazilian Project Structuring Company (EBP) were presented at the end of last week. The first invitation for bids is scheduled for May 24th, when public hearings will start to be held. After 30 days of hearings, the studies will be forwarded to the Federal Audit Court (TCU) for a final review. The definitive document is expected to be published in September.

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