Manager entered the area in 2006 and has already invested in more than 30 local companies; Patria Infraestrutura V is the company’s fifth fund for the sector
The director Homeland Investments announced the closing of fundraising for its fifth fund specializing in contributions to infrastructure projects, Patria Infraestrutura V. The amount amounted to R$15.4 billion (or approximately US$2.9 billion), in what has become the largest fund for the sector ever created in Latin America.
“This financing, much larger than the previous one, is a gauge of the interest of global investors in Latin America, which has a huge bottleneck in the infrastructure sector,” says André Sales, managing partner of Patria Investimentos and CEO of Patria Infraestrutura. The previous fund, Patria Infraestrutura IV, raised R$10 billion in the second half of 2020.
With R$266 billion of assets under management, Patria has R$40 billion earmarked for projects in the sector alone. It has already invested in more than 30 companies in the area, mainly in Brazil, Chile and Colombia. Among the invested segments are roads, data centers, water desalination operations, renewable energy and electric mobility.
Since most infrastructure projects are implemented on the basis of long-term financing (so-called project financein market jargon), representing 75% of the invested capital, Patria V has the capacity to manage R$60 billion in works in the region.
According to Sales, a significant part of the investors from the previous funds have made new contributions to Patria Infraestrutura V, but there are also new investors. Many of them come from Asia, as well as Europe, the United States and Latin America itself. Types of investors include sovereign wealth funds, pension funds, endowments, asset managers, insurance companies and financial development institutions.
Each Patria infrastructure fund has duration cycles that require three to five years to execute investments and, on average, 12 years between investment and exit from the business. The Patria II and III funds have already been fully disinvested and IV is expected to begin the phased disinvestment process starting next year.
In practice, this means that resources were invested in certain projects and, once matured, were sold to the companies that manage them or to other investors. Patria does not disclose the average return or duration of investment funds.
Last year, for example, the manager sold the 45% stake he held in Entrevias, the motorway concessionaire in the Centre-West of São Paulo, in which he had invested with the Patria Infraestrutura III fund. The buyer was Singapore’s sovereign wealth fund GIC. In 2022, 55% of the concession had been purchased by the French operator Vinci Highways.
On another divestment front, Patria sold the data center company Odata, created in 2015, in 2022. Present in Brazil, Chile, Colombia and Mexico, the company was bought by the American company Aligned Data Centers for $1.8 billion, according to the Bloomberg news agency.
Difficult season for fundraising
It took the manager a year and a half to raise Patria Infraestrutura V. “We have been doing this for 20 years and, with each harvest, there is a story that influences and makes fundraising difficult,” says Felipe Pinto, partner at Patria Investimentos and head of infrastructure fund development. “Because this investor has a long-term perspective, probably 12 years, he will face everything imaginable.”
For him, this horizon means that the investor has other concerns that go beyond the current environment, such as long-term inflation, institutional stability and strong regulatory frameworks in different countries. “The demand for infrastructure in Latin America is huge, amounting to $100 billion a year,” he says. “Our fund is a drop in the ocean, but there is a maturation and consolidation of sectors that did not exist before.”
In this path Patria started from private and unregulated infrastructure works, and then moved on to concessions and other areas, such as digital infrastructures. “The highway sector in Brazil and Colombia, for example, is well-established and globally recognized for its good regulation,” he says. “Sanitation, which 15 years ago was quite complex, has progressed a lot.”
For them, the sectors of data centerenergy transition, decarbonisation and climate-related investments are likely to gain traction in the coming years. An example is a desalination plant in Chile, for industrial and agricultural use.
Source: Terra
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