(Bloomberg) Vinci Partners is reportedly in the market targeting US$500m to US$700m in capital commitments for a fund that will target infrastructure opportunities in Brazil.

The crisis engulfing Brazil’s construction sector is creating an unprecedented opportunity for infrastructure investors.

At least that’s the pitch from asset management firm Vinci Partners Investimentos to would-be clients. Vinci has assembled a seven-member infrastructure team, and representatives have been touring the globe to court investors for a new $500 million to $700 million fund, according to Jose Guilherme Souza, who heads the group. He said investors can also co-invest alongside the fund in specific projects.

For example, Souza is working with a European investor he wouldn’t name to present a bid as a series of airport concessions go to auction. That’s a deal he says he previously wouldn’t have dreamed of participating in.

“It’s the first time in many, many years that we’re seeing a rational competitive environment,” Souza said last week in his Rio de Janeiro office. “Investors are going to gain access to very high-quality infrastructure assets, and at a time when demand for new infrastructure in the country is very high.”

Brazil’s real has advanced 12 percent this year, after plummeting 33 percent in 2015 against the dollar.

New Players
A widespread pay-to-play corruption scandal has brought many traditional builders and concession-operators to their knees. With the economy and federal budget in crisis, other participants in the infrastructure sector — notably pension funds and the government itself — are sitting on the sidelines and may even look to sell existing projects. All that has opened the door to new players.

Souza says he’s seen a wave of very attractive assets come to market. More importantly, he says investors like him may finally be able to truly compete in government-run auctions for infrastructure contracts including airports, power and waste-treatment facilities. Those auctions were previously dominated by a group of Brazilian construction and engineering conglomerates, some of which have declared bankruptcy amid the corruption probes and recession.

The new fund will have a life of 10 to 14 years, and Vinci is putting in at least 10 percent of its own money. Souza declined to go into specifics about the fee structure.

Alluring Returns
The allure of Souza’s thesis is clear: He says there are Brazil infrastructure investments out there today that offer returns of 15 percent annually plus inflation, currently running at 9.28 percent annually through April. In an asset class that typically aims for bond-like profits — steady streams of cash flows, rather than the exorbitant capital gains of private equity and hedge funds — such numbers are unusual.

So what’s the catch? Souza says there’s always regulatory and political risk when it comes to operating concessions. He plays that down, saying that Acting President Michel Temer has been making the right overtures to investors since he took over this month.

Temer’s government plans about 100 new concessions and 40 infrastructure contract renewals, which would mean investment of around 110 billion reais ($31 billion), Brazilian newspaper Estado de S. Paulo reported Monday.

There’s also exchange-rate risk for dollar-based investors: The measure for one-month implied volatility suggests the real could swing 17.7 percent over the next 12 months, making it the fifth-most volatile emerging-market currency. Souza thinks that it most likely will get stronger.
That’s far from certain, but if he’s right, the infrastructure sector could mean fat profits in the years to come.

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