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Brazil’s Mantiq To Raise Money Abroad For Infrastructure Fund

25 February 2013

(Dow JonesMantiq, which was spun off from Banco Santander Brasil SA (BSBR, SANB4.BR) last year, currently manages three private equity funds with total investments of about 2.5 billion Brazilian reais ($1.27 billion). In addition to a fund that invests in the oil and gas industry supply chain, and another that invests in renewable energy and other environmentally sensitive technologies, Mantiq’s biggest fund is a BRL1.3 billion general infrastructure fund.

As interest grows in Brazilian opportunities, the firm is now seeking BRL1 billion for a second general infrastructure fund that will launch by next year, said fund manager Marcos Matioli. He said the company will seek out investors from outside the country to help build the fund.

“There has been increasing demand from foreign investors in the past 12 months,” Mr. Matioli said in an interview. Not only are overseas investors focusing more on Brazil due to a dearth of projects in the U.S. and Europe, where fallout from the 2008 financial crisis is still taking a toll, but “Brazil’s government has been creating clear advantages…and a regulatory framework for these investments to happen,” he said. “We expect that infrastructure investment will increase a lot going forward.”

Brazil’s government last year committed itself to handing over tens of thousands of kilometers of highways to private operators, as well as licensing out construction of about 7,500 kilometers of new railways. The government is also undertaking a rewriting of port operation rules to encourage more private investment, and will transfer operation of two more major airports to private companies later this year as it seeks to boost capacity ahead of the 2014 World Cup and 2016 Summer Olympics, both to be held in Brazil.

But as the government recognized that it doesn’t have the capacity–even with backing from national development bank BNDES, which annually lends out more than BRL100 billion–to carry out the investments alone, it has been increasingly courting private investors.

This month, Finance Minister Guido Mantega and other high-level government officials began a road show, with stops scheduled in New York, London and Tokyo, to raise funds for the country’s infrastructure projects and future oil and gas exploration.