EPR wins Régis Bittencourt highway concession
Régis Bittencourt highway auction at B3: EPR offered a 22.53% toll discount, well above rival bids
Cauê Diniz/B3
EPR, a company backed by Equipav and Perfin, won the concession for the Régis Bittencourt highway in a competitive process held Thursday (23) at B3 stock exchange in São Paulo. The group offered a 22.53% discount on the base toll rate.
The contract, currently held by Arteris, will be transferred to the new operator. The concession is being renegotiated with the federal government under terms that call for R$7.2 billion in investment over the next 15 years, the duration of the new contract.
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Thursday’s auction was one of the final steps in the renegotiation process. Under procedures established by Brazil’s Federal Court of Accounts (TCU), revised concessions must be put back on the market to avoid the risk of favoring a specific economic group. As a result, Arteris lost the asset.
Transfer terms
The current operator will receive compensation from EPR, initially set at R$120 million. The amount is based on 2023 values and will be adjusted for inflation, potentially reaching about R$400 million.
EPR must also pay R$423 million as a concession fee because of the size of its toll discount. Under the auction rules, bids offering discounts above 18% require the winner to deposit funds into an escrow account that acts as a cushion for potential future contract rebalancing.
The tender documents also state that the new operator will assume the concessionaire’s market debt, which stands at R$1.7 billion on a net basis.
The contract provides for R$7.2 billion in investment, also based on 2023 values, as well as another R$4 billion in operating expenses.
Three groups competed for the concession: Arteris, Motiva and EPR. The winner was determined by the largest discount offered on the base toll rate, capped at R$0.05912 per kilometer.
Motiva offered a 12.1% discount, while Arteris bid just 0.01% below the maximum toll rate.
Strategic corridor
EPR already operates seven highway concessions in Minas Gerais and Paraná.
“Our strategy is always to look at strategic logistics corridors in Brazil. This connection between Curitiba and São Paulo is a very important stretch. It is a corridor with known, mature traffic demand and growth potential,” said José Carlos Cassaniga, EPR’s chief executive.
Late last year, Arteris renegotiated another major concession in its portfolio, Fernão Dias. That asset was also lost to Motiva, which submitted the largest toll discount in the competitive process.
Transition lessons
The transfer of the Fernão Dias contract, viewed in the market as a form of government-mediated acquisition, was turbulent.
During the process, Motiva questioned Arteris over the renewal of a contract with a car rental company during the transition period. There were also questions about cash adjustments that may have inflated the balance before the transfer and a notice indicating that computers would be formatted before control changed hands. The new operator later said all the issues had been resolved.
Asked about the upcoming transition for Régis Bittencourt, Transport Minister George Santoro said communication failures had contributed to the problems in the Motiva transaction and would not be repeated this time.
“The noise that emerged was actually a communication problem that could have been avoided. We brought the two companies together to talk and resolved it quickly. It was not a serious issue. Arteris has always been structured vertically, and information from the group was mixed across the assets. With the change we are now making to separate those assets, a communication problem arose that I don’t think will happen again. The experience from the previous process has already been incorporated into this one. I am certain there will be no noise,” Santoro said.
EPR’s Cassaniga also said the company was comfortable with the transition process.
“We are absolutely confident that we will design a transition plan based on the assumptions set out in the tender documents and that it will be very well conducted. We are prepared for that. We also understand that there are lessons learned from previous processes,” he said.
More auctions
The government has already scheduled another competitive process involving a renegotiated contract. Via Brasil, which operates BR-163 between Mato Grosso and Pará and is controlled by Conasa, will be put up for bidding on November 12, after the elections.
The Transport Ministry is also negotiating with four other highway concessionaires: Concebra and Transbrasiliana, both controlled by Triunfo, and Litoral Sul and Planalto Sul, which are currently controlled by Arteris. No dates have yet been set for those competitive processes.
