Brazil sold the country’s second-busiest airport for almost four times the minimum bid as part of Brazilian President Dilma Rousseff’s program to modernize infrastructure and shore up investor confidence.
The Aeroportos do Futuro group led by Odebrecht SA, and including Singapore airport operator Changi Airport Group, offered 19 billion reais (US$8.3 billion) and won the right to run 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.
The real surged as the auction showed Rousseff can attract investors to her 212 billion reais plan for improving roads, railways, ports and other infrastructure even as growth in Latin America’s largest economy slows. The government is under pressure to complete the projects as the country prepares to welcome a projected 600,000 international visitors for the World Cup in June.
“Those pessimistic about Brazil will have a bitter day today,” Rousseff said in a speech in the northeastern city of Fortaleza. The airport auction “didn’t go wrong,” she said.
The real rose as the premium on Galeao airport boosted speculation more dollars will flow into Brazil, according to Pablo Spyer, a director at Mirae Asset Management in Sao Paulo.
Singapore’s air transport system is ranked first for quality in the World Economic Forum’s latest Global Competitiveness Report, based on a survey of more than 13,000 business leaders. Brazil’s system, by contrast, ranks 123rd on the list of 148 countries. Changi airport in Singapore was the 13th-busiest in the first eight months of this year, 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. Afterward, the government was criticized for setting terms that failed to draw the world’s biggest airport operators, so the terms were redrawn for Friday’s auction.
The Aerobrasil group, led by CCR SA, including the operators of Munich’s and Zurich’s airports, on Friday won the right to operate the Confins airport in Belo Horizonte for 30 years.
The group offered 1.82 billion reais versus a minimum bid of 1.1 billion reais.
The government will auction three highways before the end of the year, Brazilian Finance Minister Guido Mantega told reporters on Friday in Brasilia.
One of those road projects is “risky” in terms of attracting bidders, according to Jefferson Finch, an analyst from political risk consultancy Eurasia Group.
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.