Capital markets are crucial in expanding access to long-term local currency funding for infrastructure projects in Brazil, helping to close the financing gap and improve the quality of infrastructure services. IFC is investing up to BRL780m ($150m) in an infrastructure debt fund managed by Patria Investimentos to help enhance Brazil’s competitiveness by aiding critical infrastructure investments while also helping boost capital markets development.
How will debt fund be utilized?
As an anchor investor of Patria Infra FIDC, IFC will also help mobilize investments from institutional investors. The fund will have a target size of BRL5 billion and invest on infrastructure projects in sectors that are key to boost economic growth in Brazil.
The infrastructure debt fund will also help tackle climate issues, as it will focus on solutions and technologies that mitigate emissions in sectors including renewable energy, digital infrastructure, transport, waste management, and water & sanitation. Patria Infra FIDC will contribute to addressing the gender gap in infrastructure projects as it aims at including in its portfolio at least twenty percent of projects or companies with female participation.
Why is the debt fund a timely one?
“Brazil is embracing local capital markets instruments to attract private investments. IFC’s investment in Patria Investimentos’ new debt fund will contribute to increasing access and improving the quality of infrastructure services through private sector participation in capital markets, which is essential for economic growth in the context of limited fiscal space for public investments,” commented Carlos Leiria Pinto, IFC Brazil Country Manager.
Despite recent progress, the quality of infrastructure remains a key deterrent to Brazil’s economic growth, with the country ranking 50th out of 160 economies in terms of quality of infrastructure, according to the World Bank Logistics Performance Index, 2018-19.
The private sector plays a key role in developing critical infrastructure but faces challenges accessing long-term debt finance. Patria Investimentos is an experienced Brazilian fund manager with over US$26.5 billion equivalent of assets under management, and it has a long-standing relationship with IFC, which includes debt facilities and equity investments.