In Auction Held on This Day 30, Valued at BRL 106 Million, Companhia de Docas do Espírito Santo (Codesa) Is Sold to Quadra Capital

Beyond the Port Authority of Espírito Santo (Codesa), Quadra Capital Will Take Over the Concession of the Barra do Riacho Terminal and the Port of Vitória Under a 35-Year Contract Made at the Auction

The Port Authority of Espírito Santo (Codesa) was privatized through an auction for R$ 106 million this Wednesday. The project for the privatization of Codesa received proposals from the Beira Mar Consortium and Quadra Capital, being sold to the latter, represented by FIP Shelf 119 Multiestratégia. Codesa is the first state-owned company in the port sector to be sold at auction in Brazil and will be used as a test for the privatization of other ports, such as the Port of Santos in São Paulo.

Beyond the Port Authority of Espírito Santo (Codesa), Quadra Capital will take over the concession of the Barra do Riacho Terminal and the Port of Vitória under a 35-year contract, in which the forecast is that investments will reach R$ 850 million, with R$ 335 million for the expansion of the ports. The winning consortium was represented at the auction by the brokerage Necton.

With the sale of the Port Authority of Espírito Santo (Codesa) at auction, the company ceases to be public and becomes privately owned after the payment of R$ 326 million for its shares. The commitments and existing debt at the Port Authority of Espírito Santo (Codesa) will be assumed by the investment fund. A hybrid model of port management was chosen, the first in Brazil. The bidder also had to pay for the right to explore Barra do Riacho and Vitória, meaning that in the same auction, Quadra Capital acquired both assets.

Favorable Position of the Port of Vitória

According to A Gazeta, the Port of Vitória has a favorable position with rail and road access, in addition to a consolidated portfolio of cargo. According to BNDES, studies show potential to double cargo movement to 14 million tons per year during the concession.

The Barra do Riacho Terminal, located in the northern part of Espírito Santo, specializes in the shipment of cellulose, handling 8 million tons annually. According to BNDES, of the 860 thousand square meters of total area, 522 thousand may be used for new activities in the port zone.

In addition to the money spent on purchasing the Port Authority of Espírito Santo (Codesa) at the auction and authorization for exploration of the ports, Quadra Capital will make some mandatory investments.

Research indicates that, with the sale of the Port Authority of Espírito Santo (Codesa) at auction, port revenues are expected to quadruple during the concession period. BNDES predicts that Codesa’s net revenue should increase from R$ 170 million in the first year to R$ 710 million by the end of the contract.

Functions of the New Port Authority of Espírito Santo

With the sale of Codesa at the auction, the functions related to port management will undergo changes, which are:

• Infrastructure Provider: currently, almost all infrastructure is funded by public resources. The intention is that now the obligation of these investments shifts to the new concessionaire;
•  Service Provider: today many services are private and others are performed by the public port authority, which will become the responsibility of the private manager;
• Harmonization of Authorities: the government will exercise the function, with the support of information and systems from Quadra Capital;
• Port Operation: already private since 1993;
• Area Provider: the new model implies that the port manager can provide areas for private operators interested in conducting storage, loading, and unloading operations. Today this is done by the Ministry of Infrastructure through leasing auctions. The goal is for the concessionaire to gain the power to allocate operational areas under the new model.