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CLT Presentation - Boosting UK investor capability to finance Brazil

Boosting UK investor capability to finance Brazil’s infrastructure

Last week, CLT presented the British Consulate-General in São Paulo with the final results of our study into UK investor appetite for green infrastructure projects in Brazil. Jeffrey Beyer, CLT’s Principal Consultant, shared the findings of the study to help the Embassy further develop its green finance and investment strategy.

The study involved interviews with 85 stakeholders in the UK and Brazil. We discovered infrastructure investment opportunities of $1.2 trillion up to 2040, with the majority of potential projects in transport (especially roads), energy generation and transmission assets.

Sixty per cent of UK investors we interviewed were either active or interested in Brazil as an infrastructure investment destination. But investors often lacked teams with Brazilian experience and found that the country’s BB- credit rating fell below the investment grade they typically required.

The Brazilian government is working hard to attract investors by improving the market for private sector participation. It is issuing more infrastructure concessions, has launched the Programme for Investment Partnership (PPI) and has adjusted interest rates from the development bank BNDES so private finance isn’t crowded out.

The UK government is also helping British business access foreign markets. It is developing standard assessment methodologies through the Infrastructure and Projects Authority and is supporting initiatives like the Global Infrastructure Programme and platforms like Infrastructure Exports UK.

These initiatives are encouraging, and Jeffrey outlined other insights gained by CLT during the project to further reduce barriers to foreign investment in Brazil. Projects could be de-risked by establishing a technical and ESG due diligence revolving fund. The fund would pay for feasibility studies and offer them to many potential investors on the condition that the ultimate investor reimbursed the cost of the study.

Other insights included building technology-finance packages by pairing UK investors with UK technology providers to finance ‘infrastructure of the future’ like decentralised energy generation.

To help the Embassy curate relationships with a targeted group of investors, our study also uncovered the top 15 UK investors who are either actively investing or considering investing in Brazil’s green infrastructure projects in the short to medium term.

The Embassy found the work insightful and highly beneficial.

This will have a huge impact on our work internally and externally. It helps us understand what investors need – you delivered all of what we wanted. It’s good for our strategy and will help us implement the vision of the Prosperity Fund, knowing what investors are really looking for. Thank you. – Luiz Nano, Business Development Manager for Infrastructure, Department for International Trade, British Consulate General in São Paulo