(Bloomberg) — Brazilian asset manager Navi Capital has assembled a team to bet on Brazil’s bustling pipeline of infrastructure projects, in the hopes of cashing in on what could amount to $42 billion in investment opportunities in coming years.
The firm hired Guilherme Albuquerque, the former head of the public-private partnerships department at Brazil’s state development bank BNDES, and Guilherme Sassi, an ex-Santander Brasil executive, for the business, deputy chief executive officer Gustavo Ribas said. The duo started in June and sees opportunities in sectors ranging from sanitation to energy and transportation.
“With rates at structurally low levels, investors end up flocking into riskier, higher-yielding products,” Albuquerque said in an interview. “The infrastructure sector is poised to keep growing in Brazil and capital markets should be an increasingly more-relevant source of funding.”
Brazil ranks 78th out of 141 countries in terms of infrastructure quality, according to the World Economic Forum, and over 90 million Brazilians currently lack access to sewage collection. Last October, Bank of America Corp. estimated there will be a 220 billion reais ($42.4 billion) investment opportunity in Brazilian infrastructure in the coming years, from airports to railways. The nation’s cash-strapped government has sped up auctions of infrastructure assets, while approving legislation to ease investing in sectors such as natural gas and sewage.
“Brazil still lags in terms of infrastructure investment, regardless of the segment, but we’ve been experiencing some micro reforms and the potential is enormous going forward,” said Sassi.
Navi’s first foray into the sector will be a fund focusing on infrastructure-related debt to be launched over the next six months, according to Albuquerque. Later, it plans to buy equity stakes in projects as well.
Betting on infrastructure is also a means of diversification at Navi Capital. The firm, which has about 54 employees and 9.2 billion reais under management, was created in 2018 as an equity-focused asset manager. It later brought in Ribas, a former executive at Jorge Paulo Lemann’s private equity firm 3G Capital Partners Ltd., to start adding new asset classes including credit and real-estate products.
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