Brazilian private equity firm Patria Investimentos has raised a 10 billion-real ($2 billion) fund to invest in infrastructure in Brazil and elsewhere in Latin America, it said on Monday, adding that logistics, energy and telecoms would be key targets.
The infrastructure fund, Patria’s fourth, was almost double the size of its previous such fund five years ago and underscored the opportunities investors see, especially in Latin America’s largest economy.
Patria is 40% owned by U.S. private equity firm Blackstone Group Inc (BX.N).
The Brazilian government estimates the country needs 600 billion reais in new investments to expand and universalize water and sewage services that remain limited in many areas.
“Despite the coronavirus pandemic, we saw that many investors understood how many opportunities there are in infrastructure in the region,” Patria’s founder and partner Otavio Castello Branco said in an interview.
A steady drop in Brazil’s benchmark interest rates, which have now reached a record low of 2%, has fueled a quest for higher-return alternatives to government bonds. Domestic investors accounted for 25% of the fund, setting a record among Patria-raised funds.
Although the fundraising was concluded only this week, Patria has already destined 40% of its proceeds for three assets: Brazilian solar and wind energy firm Essentia, highway operator Eixo-SP and a still unnamed cellular tower company.
Felipe Pinto, another Patria partner, said the fund may invest in these sectors further while also looking for assets in gas power generation, sanitation and telecoms assets beyond towers.
The executive said that although Patria had wanted to invest in the water and sanitation sector in the past, the lack of robust regulations governing the sector gave it pause. That changed in June with congressional approval of a new sanitation law.
Nearly 80% of the fund’s proceeds are likely to be invested in Brazil, although Colombia and Chile may provide other targets, Pinto said.
The fund’s investment phase is expected to be concluded by 2021, while it may take up to 12 years to sell off the assets.
(In this story, Patria corrects the amount in dollars to $2 billion, not $1.8 billion, to reflect closing date)