The Inter-American Development Bank announced the approval today of a loan of up to $75 million to help create a Brazilian Infrastructure Investment Fund to promote medium and long-term financing from the private sector for infrastructure projects.
The $575 million investment fund in local currency will be a mixed debt-equity fund designed to invest primarily in private sector infrastructure projects and public utility companies in the areas of energy, transportation, telecommunications, water and sanitation, among others. It is expected to invest in approximately 15 different projects or businesses and will follow guidelines to ensure diversification and avoid excessive concentration in one area or business.
The fund will help solve the lack of long-term financing in Brazil and will be managed by an independently selected fund-managing corporation that could also contribute capital to the fund. It will capture savings provided by pension funds in Brazil and funds from other institutional investors, whose investments will be in the form of quotas in the fund.
The fund seeks to offer a better long-term return to its investors than what is currently generally available in the country for long-term investments. The new investment vehicle will bolster financial markets, and its model could be repeated based on the new regulations that have accompanied the establishment of the new financial tool.
This announcement is only for information purposes and does not constitute an offer for a sale nor is it a solicitation for the purchase of securities.