Singapore Operator Pays $8.3 Bln for Rio de Janeiro Airport

Brazil’s government today sold the

country’s second-busiest airport for nearly four times the

minimum bid as part of President Dilma Rousseff’s program to

modernize infrastructure.

The Aeroportos do Futuro group led by Odebrecht SA, and

including Singapore airport operator Changi Airport Group,

offered 19 billion reais ($8.3 billion) and won the right to

operate Galeao airport in Rio de Janeiro, which will host

tourists for the soccer World Cup next year and the 2016 Olympic

Games, for 25 years. The offer compares with the minimum

required bid of 4.83 billion reais.

Today’s auction forms part of a program Rousseff announced

last year to attract 212 billion reais in investment for roads,

railways, ports and airports. The drive aims to ease bottlenecks

and boost expansion in Latin America’s largest economy, which

will grow less in the first three years of Rousseff’s

administration than in any similar period since 2001-2003,

according to economists surveyed by Bloomberg.

“The government is going to say this was a tremendous

success, because it attained its objectives,” Adriano Pires,

head of the Brazilian Center for Infrastructure in Rio de

Janeiro, said by phone. “This is a success of Brazilian-style

capitalism, a partnership of government and the private

sector.”

The Aerobrasil group led by CCR SA (CCRO3), including the operators

of Munich’s and Zurich’s airports, offered 1.82 billion reais

for the right to operate Confins airport in Belo Horizonte for

30 years, compared with a minimum bid of 1.1 billion reais.

Infraero Stake

Brazil’s state-run management company Infraero will retain

a 49 percent stake in the airports, and the winning bidders will

contribute 5 percent of annual revenue to support the country’s

other airports.

Brazil’s economy grew 2.7 percent in 2011 and 0.9 percent

in 2012. Analysts surveyed by Bloomberg forecast 2.5 percent

expansion this year, for a three-year average of 2 percent,

compared with 8.1 percent in China and 3.2 percent in Russia,

two of its counterparts in the so-called BRIC group of nations.

Five groups submitted bidding documents on Nov. 18. Brazil

required bidders for Galeao to have experience managing airports

that handle 22 million passengers a year, and for Confins 12

million passengers.

Galeao handled more than 17 million passengers in 2012,

according to the civil aviation agency, known as Anac. Confins

is the fifth-busiest Brazilian airport, handling more than 10

million last year.

2016 Olympics

Investment in Galeao is expected to reach 5.7 billion

reais, including cargo storage installations in time for the

2016 Olympics, according to Anac. Investment for Confins

includes construction of a new terminal and runway, and will

reach about 3.5 billion reais.

The quality of Brazil’s air transport infrastructure ranked

123rd in the World Economic Forum’s latest Global

Competitiveness Report, based on a survey of more than 13,000

business leaders. Singapore ranks first on the list of 148

countries. Its Changi airport was the 13th-busiest in the first

eight months of 2013, according to the Airports Council

International in Montreal.

Last year, Brazil sold licenses for three airports,

including Brasilia and Sao Paulo’s Guarulhos, for a total of

24.5 billion reais. The winner of the Guarulhos concession

offered nearly five times the minimum bid. Afterward, the

government was criticized for setting terms that failed to draw

the world’s biggest airport operators, so the terms were redrawn

for today’s auction.

Delays, Revisions

Rousseff’s infrastructure drive has suffered a series of

delays and revisions. The government has not yet auctioned any

railway or port concessions, which it originally pledged to do

this year. It has pushed back its high-speed rail project to

connect Rio and Sao Paulo until after presidential elections

next October.

Earlier this year, the government had to boost the rate of

return for road projects after an initial offer did not generate

interest. Still, one of two roads auctioned in September drew no

bids.

To contact the reporters on this story:

David Biller in Rio de Janeiro at

dbiller1@bloomberg.net;

Christiana Sciaudone in Sao Paulo at

csciaudone@bloomberg.net;

Taís Fuoco in Sao Paulo at

tfuoco1@bloomberg.net

To contact the editor responsible for this story:

Andre Soliani at

asoliani@bloomberg.net

Singapore Operator Pays $8.3 Bln for Rio de Janeiro Airport