Patria Announces Launch of Infrastructure Private Credit Fund Anchored by BNDES, CAF and IFC

Rhea-AI Summary

Patria Investments Limited launches Infrastructure Private Credit fund with R$1 billion initial investment, focusing on social impact sectors like renewable energy and urban mobility. The fund aims to raise up to R$5 billion in the long term. Major financial institutions like BNDES, CAF, and IFC are key investors, supporting projects from the Growth Acceleration Program (PAC) in Brazil.

Insights

Financial Analyst

The launch of Patria Investments Limited's Infrastructure Private Credit fund represents a strategic move by the company to capitalize on the growing need for infrastructure development in Brazil. With an initial capital of R$1 billion, the fund's potential to raise up to R$5 billion positions it as a significant player in the private credit sector. The involvement of major financial institutions such as BNDES, IFC and CAF indicates a strong vote of confidence in Patria's ability to manage and allocate funds effectively.

From a financial perspective, the fund's focus on projects ranging from R$50 to R$100 million each targets a gap in the market for small to medium-sized infrastructure projects. This niche approach could yield high returns due to the lack of competition and high demand for infrastructure financing. Additionally, the fund's strategy to invest in high social impact sectors aligns with global ESG trends, potentially attracting international investors seeking sustainable investment opportunities.

However, the success of the fund hinges on the execution of its investment strategy and the performance of the underlying assets. Infrastructure projects are known for their long gestation periods and associated risks, such as regulatory changes and project delays. Investors will need to weigh these factors against the potential long-term benefits of economic growth and social development promised by these investments.

Economist

The establishment of this fund by Patria Investments is indicative of a broader economic shift towards sustainable development within Brazil. By focusing on infrastructure areas critical to the energy transition and economic growth, such as renewable energy, basic sanitation and urban mobility, the fund is poised to contribute significantly to Brazil's productivity and competitiveness.

Infrastructure investment is a key driver of economic development, often leading to job creation and improved quality of life. Given Brazil's size and regional disparities, targeted investments in infrastructure can help reduce inequality and foster inclusive growth. The support from development banks underscores the fund's potential role in catalyzing private sector participation, which is crucial given the limited fiscal space for public investments in Brazil.

Moreover, the fund's alignment with the Growth Acceleration Program (PAC) suggests a synergistic approach to national development priorities. By channeling capital towards projects endorsed by PAC, the fund not only amplifies the impact of government initiatives but also benefits from a framework that has been politically sanctioned and is likely to receive ongoing support.

Sustainable Development Expert

Patria's new fund underscores a growing trend in the alignment of investment strategies with sustainable development goals. The emphasis on sectors with high social impact, particularly those that contribute to the energy transition, reflects a strategic understanding of the long-term value creation associated with environmental and social governance (ESG) principles.

Investing in renewable energy, sanitation and urban mobility can lead to substantial improvements in public health, environmental sustainability and overall quality of life. These sectors are also in line with the United Nations Sustainable Development Goals, which may enhance the fund's appeal to institutional investors with mandates to support these global objectives.

The involvement of international development agencies in the fund's capital raising efforts suggests that the fund could serve as a model for similar initiatives in other emerging markets. By demonstrating the viability of private credit in financing socially impactful infrastructure projects, Patria's fund could inspire the development of new financial instruments aimed at sustainable development in regions with similar economic profiles.

New fund will have the capacity to invest R$1 billion at inception, focused on sectors with high social impact, and will be able to raise additional capital from regional banks, institutional investors, and international development agencies

GRAND CAYMAN, Cayman Islands, Feb. 21, 2024 (GLOBE NEWSWIRE) -- Patria Investments Limited (“Patria”) (NASDAQ: PAX), a global alternative asset manager and market leader in Latin America, announces the launch of its Infrastructure Private Credit fund (“The Fund”), which has already raised R$1 billion (or approximately US$ 200 million) from BNDES (the Brazilian Development Bank), CAF (Development Bank of Latin America and the Caribbean), IFC (International Finance Corporation, a member of the World Bank Group), and other institutional investors. Focused on areas that directly impact the energy transition as well as the Brazil's economic and social development, such as renewable energy, basic sanitation and urban mobility, the Fund aims to raise up to R$5 billion (or approximately US$1 billion) in the long term, mainly from institutional investors.

"The investment strategy combines the skills and expertise of two important areas within Patria - Infrastructure and Private Credit. The launch of this fund consolidates our position as one of the most important investors in both areas and is aligned with our goal to continuously contribute to the development of the country," says José Augusto Teixeira, Partner and Commercial Head of Patria in Brazil. “The Fund also plans to support projects from the Growth Acceleration Program (PAC), a Brazilian Federal Government program.”

For Patria, which is a significant investor in long-term projects with high social impact, the partnership with major financial development institutions operating in Brazil is of paramount importance to make funds like this viable. The institutions supporting the Fund play a critical role in providing long-term development capital in Brazil, especially in areas such as infrastructure, always seeking investments that promote innovation, create new jobs and strengthen the overall economy.

"IFC's investment in the new Patria fund will contribute to increase access to and improve the quality of infrastructure services through private sector participation in capital markets. This is essential for economic growth in a context of limited fiscal space for public investments," said Carlos Leiria Pinto, IFC's Brazil Country Manager.

"Historically, BNDES has been one of the main providers of funds for investment in infrastructure in Brazil, given the importance of this sector for the country's economic development and improvement of the quality of life for Brazilians," says the Bank's Capital Markets and Sustainable Finance Director, Natália Dias. "In this context, the investment in this Patria fund has the potential to further expand BNDES' role in financing the sector, especially in supporting small and medium-sized projects that have greater difficulty in accessing traditional financing structures and the capital markets. Another differentiator of the fund, and a fundamental factor in BNDESPAR's decision to allocate resources to it, was its priority to invest in sectors targeted by the PAC, encouraging the deployment of impact capital and financing companies with less market visibility.”

"Considering our long expertise in investment funds in Latin America, we are confident that this fund, in partnership with BNDES, IFC and Patria, will result in important impacts to the Brazilian economy, leading to more and better infrastructure, a critical element for economic and social development," said Jorge Arbache, Vice President of Private Sector at CAF – Development Bank of Latin America and the Caribbean.

The Fund primarily seeks to provide long-term credit for small and medium-sized projects under development in essential sectors of Brazilian infrastructure, initially in the range of R$ 50 to R$ 100 million per project, complementing the operations of development banks in the region.

"The fund is quite innovative, given that it will be able to finance projects through customized structures, appropriate to the characteristics of each project," adds Marcelo Souza, Partner and Head of Infra Core, Infra Credit and Energy Infrastructure Strategies in Brazil. “This is a strategic step that aims to strengthen investments at the regional level and thus have a positive impact directly on these communities. Projects within the sectors of focus, such as energy, transport and sanitation, are extremely important for the development of the country as they contribute to the energy transition and help solve structural bottlenecks that improve the efficiency of the economy and people's quality of life."

About Patria

Patria is a global alternative asset manager and industry leader in Latin America, with over 35 years of history, combined assets under management of $31.8 billion, and a global presence with offices in 10 cities across 4 continents. Patria aims to provide consistent returns in attractive long-term investment opportunities as the gateway for alternative investments in Latin America. Through a diversified platform spanning Private Equity, Infrastructure, Credit, Public Equities and Real Estate strategies, Patria provides a comprehensive range of products to serve its global client base. Further information is available at www.patria.com

About BNDES

Throughout its 71-year history, BNDES has been the main government instrument to promote long-term investments in the Brazilian economy, boosting sectors and themes relevant to the country's development, such as economic and social infrastructure, neo-industrialization, environment and climate. Through its activities, the Bank works to reduce inequalities, generate employment and income, and social inclusion, in a context of necessary transition to a low-carbon economy. It also acts in a countercyclical manner, as one of the formulators of solutions for the resumption of economic growth. For more information, visit www.bndes.gov.br.

About CAF

CAF's mission is to promote sustainable development and regional integration through the financing of public and private sector projects, the provision of technical cooperation and other specialized services. Founded in 1970 and currently composed of 21 countries – 19 from Latin America and the Caribbean, alongside Spain and Portugal – and 13 private banks, it is one of the main sources of multilateral financing and an important generator of knowledge for the region. Further information is available at www.caf.com

About IFC

The International Finance Corporation (IFC) – a member of the World Bank Group – is the largest global private sector focused development institution in emerging markets. The IFC works in more than 100 countries, using its capital, expertise, and influence to create markets and opportunities in developing countries. In 2023, IFC allocated a record $43.7 billion to private companies and financial institutions in these countries, thereby leveraging the power of the private sector to eradicate extreme poverty and increase shared prosperity as economies face the impacts of global crises. For more information, visit www.ifc.org.

Patria Shareholder Relations:
Josh Wood: +1 917-769-1611 / josh.wood@patria.com
Andre Medina: +1 345-640-4904 / andre.medina@patria.com

Press Relations:

Ideal PR (patria@ideal.pr)
Fábio Martins: (+55 11) 97336-1526 / fabio.martins@ideal.pr
Joyce Domingos: (+55 11) 99278-7627 / joyce.domingos@ideal.pr
Rodrigo Fonseca: (+55 11) 94846-5003 / rodrigo.fonseca@ideal.pr
BNDES
Atendimento: (+55 21) 97100-0259 / imprensa@bndes.gov.br
CAF
Atendimento: (+55 61) 8112-6277
International Finance Corporation (IFC):
Patricia Carvalho: (+55 11) 5185-6873 / pcarvalho@ifc.org

FAQ

What is the name of the Infrastructure Private Credit fund launched by Patria Investments Limited?

The Infrastructure Private Credit fund launched by Patria Investments Limited is named 'The Fund'.

How much has the fund raised at inception?

The fund has raised R$1 billion (approximately US$ 200 million) at inception.

Which sectors does the fund focus on?

The fund focuses on sectors with high social impact such as renewable energy, basic sanitation, and urban mobility.

Who are some of the key investors in the fund?

Key investors in the fund include BNDES, CAF, IFC, and other institutional investors.

What is the long-term fundraising goal of the fund?

The fund aims to raise up to R$5 billion (approximately US$1 billion) in the long term.