5th Brazil Infrastructure Investments Forum Cesar Cunha Campos

5th Brazil Infrastructure Investments Forum Cesar Cunha Campos Director, FGV Projetos diretoria.fgvprojetos@fgv.br New York, November 2014

Ports - Railways - Airports - Public-Private Partnerships (PPP/P3): what to expect in the near future Airport Infrastructure in Brazil 2

AGENDA 1. ABOUT FGV AND FGV PROJETOS 2. BRAZIL OVERVIEW 3. BUSINESS OPPORTUNITIES IN THE BRAZILIAN AIRPORT INDUSTRY 3

ABOUT FGV AND FGV PROJETOS 4

ABOUT FGV AND FGV PROJETOS Fundação Getulio Vargas (FGV) founded in 1944, is the leading Think Tank in Latin America and Top 25 in the world Its mission is to boost the socioeconomic development of Brazil and boost its role in the international scene Academic Units FGV s technical advisory unit to public, private and third-sector institutions in Brazil and abroad Develops projects in different areas: economics, administration, and public policy 30 years experience Over 1300 projects developed FGV Business Schools RJ EBAPE SP - EAESP Economics Schools RJ EPGE SP EESP Law Schools RJ Direito Rio SP Direito GV Social Sciences School RJ - CPDOC Applied Mathematics School RJ - EMAp Communication & Journalism School (to be founded) Applied Knowledge Units 5 FGV Projetos Brazilian Institute of Economy (IBRE) Publishing House Continuing Education Programs (IDE) Applied Research Centers

6 BRAZIL OVERVIEW

BRAZIL OVERVIEW Geography and Population 7

BRAZIL OVERVIEW Economy 8

BRAZIL OVERVIEW Macroeconomic 9

BRAZIL OVERVIEW Macroeconomic 34 % 18% 17% 10

BRAZIL OVERVIEW Social 11

CHALLENGES AHEAD New growth model Consumptionled growth Investment- led growth BRAZIL S KEY SUCCESS FACTORS: Consistent macroeconomic policies Recovering investors confidence Reduction of real interest rates and cost of doing business Increase private investments (mainly in infrastructure) Productivity increase Investments represent only 18% of GDP Job generation Steady income increases Increased social equality Social programs 12

ECONOMIC OUTLOOK INFRASTRUCTURE: Brazilian Government estimated infrastructure investments of over US$ 295.2 billion for the coming years Highways (7.500 km), railways (10.000 km), airports and ports QUALITY OF EDUCATION: In 2011 Brazil s public expenditure on education was 6.1% of GDP above the OECD average of 5.6% Challenge: increase the quality of education In the Program of International Student Assessment (PISA), Brazil still performs below the OECD average 13 IMPROVEMENT OF PROCESSES: Improving the hiring process for public sector Bureaucracy reduction

MAKING THE CASE FOR SMART INFRASTRUCTURE INVESTMENTS: BUSINESS OPPORTUNITIES IN THE BRAZILIAN AIRPORT INDUSTRY 14

AIRPORTS AS SMART INFRASTRUCTURE Tomorrow s infrastructure will blend traditional physical-infrastructure (transportation and transit systems, buildings, pipes, power grid, concrete and steel) with cyberinfrastructure (computers, networks and sensors) in ways that are just emerging INFRASTRUCTURAL GRID COMMERCE LOGISTICS SECURITY MOBILITY INFORMATION TECHNOLOGY REAL ESTATE 15 http://www.ices.cmu.edu/sii/home.asp

million AIR TRAFFIC TREND 2009-2013 The growth of the number of domestic and international passengers departures, between 2009-2013 is 56%: 140 120 100 22% 87 17% 101 7% 1% 56% 109 111 80 71 60 40 20 0 2009 2010 2011 2012 2013 16 Source: National Civil Aviation Agency (ANAC)

17 MAJOR BRAZILIAN AIRPORTS

AIRPORTS CONCESSIONS TIMELINE Brazil + Up to 2009 2011 2012 2013 2015 PORTO SEGURO (BA) INTERNACIONAL DE CABO FRIO (RJ) SÃO GONÇALO DO AMARANTE (RN) CAMPINAS (SP) BRASILIA (DF) GUARULHOS (SP) CONFINS (MG) GALEÃO (RJ) CURITIBA (PR) RECIFE (PE) CUIABÁ (MT) 1º Batch of Concessions 2º Batch of Concessions 3º Batch of Concessions PRIVATE INITIATIVE AIRPORT NASP (SP) 18

CONCESSIONS FINANCIAL RESULTS Brazil NAME MINIMUM SIGNATURE BONUS WINNING SIGNATURE BONUS % INCREASE 2011 SÃO GONÇALO DO AMARANTE (RN) US$ 22 mi US$ 73 mi 229% US$ 73 mi 1º Auction Feb 2012 GUARULHOS (SP) VIRACOPOS (SP) BRASILIA (DF) US$ 1.5 bi US$ 852 mi US$ 250 mi US$ 7 bi US$ 1.6 bi US$ 1.9 bi 374% 160% 673% US$ 10.5 bi 2º Auction Nov 2013 GALEÃO (RJ) CONFINS (MG) US$ 2 bi US$ 467 mi US$ 8 bi US$ 780 mi 294% 66% US$ 8.78 bi 19 Source: Civil Aviation Secretariat (SAC) Exchange rate US$1=R$ 2,3326 (Sept 2014) Brazilian Central Bank

million GUARULHOS INTERNATIONAL AIRPORT São Paulo - SP 70 Passenger flow 60 50 64% 40 30 12% 9% 12% 20 10 0 2010 2011 2012 2013 2031 Source: INFRAERO, DASP OWNERSHIP ECONOMICS WINNER GROUP INVEPAR Airport Company South Africa (ACSA) STAKEHOLDERS INVEPAR: 90% ACSA: 10% WINNING SIGNATURE BONUS US$ 7 bi % INCREASE 374% ESTIMATED CAPEX DURING CONCESSION US$ 2 bi CONCESSION TERM 20 years 20 Source: Civil Aviation Secretariat (SAC) Exchange rate US$1=R$ 2,3326 (Sept 2014) Brazilian Central Bank

millions VIRACOPOS INTERNATIONAL AIRPORT Campinas - SP 90 80 70 60 Passenger flow 50 40 30 761% 20 10 0 39% 17% 5% 2010 2011 2012 2013 2041 Source: INFRAERO, DASP OWNERSHIP ECONOMICS WINNER GROUP CONSORCIO AEROPORTOS BRASIL STAKEHOLDERS TRIUNFO : 45% UTC : 45% EGIS: 10% WINNING SIGNATURE BONUS US$ 1.6 bi % INCREASE 160% ESTIMATED CAPEX DURING CONCESSION US$ 3.7 bi CONCESSION TERM 30 years 21 Source: Civil Aviation Secretariat (SAC) Exchange rate US$1=R$ 2,3326 (Sept 2014) Brazilian Central Bank

millions JUSCELINO KUBITSCHEK INTERNATIONAL AIRPORT Brasília - DF 45 40 Passenger flow 35 30 25 147% 20 15 7% 3% 5% 10 5 0 2010 2011 2012 2013 2036 WINNER GROUP CONSORCIO INFRAMERICA OWNERSHIP STAKEHOLDERS INFRAVIX :50% CORPORACION AMERICANA : 50% WINNING SIGNATURE BONUS US$ 1.9 bi % INCREASE 673% Source: INFRAERO, Brasilia Aeroporto ECONOMICS ESTIMATED CAPEX DURING CONCESSION US$ 1.2 bi CONCESSION TERM 25 years 22 Source: Civil Aviation Secretariat (SAC) Exchange rate US$1=R$ 2,3326 (Sept 2014) Brazilian Central Bank

millions ANTÔNIO CARLOS JOBIM INTERNATIONAL AIRPORT Rio de Janeiro - RJ 70 Passenger flow 60 50 40 253% 30 20 10 21% 17% -2% 0 2010 2011 2012 2013 2038 WINNER GROUP AEROPORTOS DO FUTURO OWNERSHIP STAKEHOLDERS ODEBRECHT: 60% CHANGI (Cingapura): 40% WINNING SIGNATURE BONUS US$ 8 bi % INCREASE 294 % ECONOMICS Source: INFRAERO, DASP ESTIMATED CAPEX DURING CONCESSION US$ 2.4 bi CONCESSION TERM 25 years 23 Source: Civil Aviation Secretariat (SAC) Exchange rate US$1=R$ 2,3326 (Sept 2014) Brazilian Central Bank

millions TANCREDO NEVES INTERNATIONAL AIRPORT Belo Horizonte - MG 50 45 40 Passenger flow 35 30 333% 25 20 15 10 5 31% 9% -4% 0 2010 2011 2012 2013 2043 WINNER GROUP AEROBRASIL OWNERSHIP STAKEHOLDERS CCR: 75% MUNICH/ZURICH: 25% WINNING SIGNATURE BONUS US$ 780 mi % INCREASE 66 % ECONOMICS Source: INFRAERO, DASP ESTIMATED CAPEX DURING CONCESSION US$ 1.5 bi CONCESSION TERM 30 years 24 Source: Civil Aviation Secretariat (SAC) Exchange rate US$1=R$ 2,3326 (Sept 2014) Brazilian Central Bank

AIRPORT DEVELOPMENTS OUTLOOK NEW CONCESSIONS FORECAST 2015 EXECUTIVE AVIATION BUSINESS INVESTMENT OPPORTUNITIES PRIVATE INITIATIVE AIRPORTS 25

NEW CONCESSIONS FORECAST RECIFE GUARARAPES (PE) INITIAL VALUE FORECAST US$ 557 mi N PASSENGERS/2013: 6.8 mi CUIABÁ MARECHAL RONDON (MT) INITIAL VALUE FORECAST US$ 161 mi N PASSENGERS/2013 3 mi CURITIBA (PR) INITIAL VALUE FORECAST US$ 557 mi 26 Source: Brazilian Airport Infrastructure Company (INFRAERO) The exchange rate US$1=R$ 2,3326 (Sept 2014) Brazilian Central Bank N PASSENGERS/2013 6.7 mi

PRIVATE INITIATIVE AIRPORTS Nasp The Nasp, São Paulo s new airport, will be the first public airport for commercial flights built by private enterprise LOCALIZATION Municipality of CAIEIRAS (SP) OWNERSHIP CONSORTIUM NASP ANDRADE GUTIERREZ (50%) CAMARGO CORRÊA (50%) 30 km GUARULHOS ECONOMICS Investment: US$ 2.3 bi Turnover: US$ 300 mi/year CAMPO DE MARTE PASSENGERS/YEAR 45 mi CONGONHAS 27 Exchange rate US$1=R$ 2,3326 (Sept 2014) Brazilian Central Bank http://oglobo.globo.com

EXECUTIVE AVIATION Article 627 of the MP, releases the construction of private airports for commercial flights (small planes for private use) 120 km from SP 55 km from SP CATARINA EXECUTIVE AIRPORT LOCALIZATION: São Roque (SP) OWNER: JHSF AREA: 7 mn mq INVESTMENT: US$ 169 mi in the project s 1st phase Revenue of US$ 73 mi in the 3 rd year CAÇAPAVA AEROVALE LOCALIZATION: Caçapava (SP) OWNER: Grupo Penido AREA: 2,25 mn mq (117 Aeronautical Lots 188 Commercial / Industrial Lots) INVESTMENT: US$ 107 mi 28 Source: http://economia.estadao.com.br; http://www.valor.com.br Exchange rate US$1=R$ 2,3326 (Sept 2014) Brazilian Central Bank

Thank you! diretoria.fgvprojetos@fgv.br