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Brookfield Infrastructure announced in late December it has signed agreements to invest alongside institutional investors to acquire an approximate 27% interest in VLI, one of Brazil's largest rail and port logistics businesses and subsidiary of VALE SA, for R$2 billion (approximately US$850 million), of which Brookfield Infrastructure will invest approximately $350 million.
Sam Pollock, CEO of Brookfield Infrastructure, said:
"We are pleased to be expanding our transport platform by acquiring high quality port and rail assets in South America. We expect volumes in this business to increase as the economy improves, as customers make use of our surplus capacity and as we pursue expansion opportunities, providing us with attractive future organic growth."
The terms of Brookfield's investment include a mechanism to ensure that a minimum return is achieved over a period of up to six years from closing, which is expected to occur in the first half of 2014.
Vale SA, the world's third-largest mining company, in September 2013 sold a 20 % stake in the VLI unit to Mitsui for 1.51 billion reais ($675 million) and 15.9 % to the FI-FGTS fund, the investment branch of the public pension fund FGTS, for 1.2 billion reais ($525 million).
VLI is one of the largest logistics operators in Brazil, providing transport of general cargo in Brazil through an integrated system of railroads, ports and inland terminals. Its rail consists of over 4,000 km under concession and is integrated with five inland terminals and three ports. The system covers eight states which represent approximately 60% of the country's GDP.
VLI expects to deploy over R$6.0 billion to upgrade and expand operations over the next seven years, allowing it to capture volume growth from increased activity in the agriculture, steel and other industrial sectors in Brazil.