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Vinci Partners in debut deal from Brazilian fund targeting $580m

The Vinci Infrastructure Water and Sewage fund has been boosted by a ‘game-changer’ move from the Brazilian government, Vinci Partners’ head of infra tells us.

Brazilian asset manager Vinci Partners has secured the first deal for its dedicated Brazilian water fund, which is targeting BRL3 billion ($581.8 million; €511.2 million).

The firm acquired Companhia Estadual de Águas e Esgotos – a Rio de Janeiro-based concession company responsible for providing water and sanitation services to 21 cities in the state – following an auction held last year.

The Vinci Infrastructure Water and Sewage Fund reached first and second closings last year totalling BRL320 million, with the money almost fully allocated to the maiden transaction. Vinci Partners says it is confident of additional opportunities, with the sector experiencing significant tailwinds.

“It’s our first investment in the sector after a couple of attempts in the past,” José Guilherme Souza, partner and head of infrastructure at Vinci Partners, told Infrastructure Investor. “Our movements were triggered by a change in regulation [last year] that was a game changer for the sector in Brazil, after a big effort by government to privatise the sector [via PPPs].”

There are about three million people in the region covered by the concession, Souza explained, although he said only about half of them have access to clean water and sanitation services.

“There is an important goal of universalising the service for the large amount of the population that still doesn’t have access to treated water and sanitation services. In that sector in Brazil, we are living in the Middle Ages,” he added.

Vinci Partners will focus on water efficiency in the 35-year concession, Souza said. On average, Brazil loses about 40 percent of the water that it treats and injects into the system and this is even higher in Rio de Janeiro, according to Souza.

Funds for the first and second closings have come from GP commitments, private wealth and local institutional investors, Souza said. The vehicle is targeting a net return of 20 percent.

“Going forwards, we’re going to target institutional investors in Brazil and maybe abroad, if the international community is ready to invest in this sector in Brazil,” Souza said.

Vinci Partners, which was launched in 2009, also announced last month the launch of a new transportation and logistics strategy, seeded with the acquisition of container terminal Porto Pontal in the Brazilian state of Paraná, which Vinci Partners said it is hoping to develop into one of the most modern container terminals in Latin America.