Brookfield Infrastructure Partners L.P. (
) has decided to further expand its market share in the Brazilian
toll roads platform by investing $490 million in Arteris S.A.
("Arteris"), formerly Obrascon Huarte Lain Brasil SA ("OHL
Brasil"), increasing its ownership to 31%
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This fresh investment is a follow-up of the investment decision
taken by Brookfield Infrastructure on Aug 6, 2012. On that day,
the partnership entered into a joint venture with Abertis
Infraestructuras, S.A. ("Abertis") and executed an agreement to
acquire a 60% interest in OHL Brasil. The deal, valued at $1.7
billion, comprised $1.1 billion of equity and $600 million of
This $490 million investment is due to a previously announced
mandatory tender offer that the joint venture was required to
make to the holders of 40% of Arteris not owned by the joint
The investment in toll roads will create a new window of
opportunity for the partnership. Arteris controls over 3,200 km
of roads that account for approximately 65% of Brazil's GDP and
nearly two-thirds of the 70 million vehicles that ply on
Moreover, keeping in mind the upcoming football World Cup and
Olympics, Arteris has invested over R$500 million to widen its
roads, which is expected to increase throughput going forward.
Brookfield Infrastructure Partners follows a strategy of
monetizing its mature assets and utilizing the net proceeds in
areas with higher return potential. On Jul 3, 2013, the
partnership sold its 42% interest in an Australasian regulated
distribution business for $410 million. Brookfield Infrastructure
Partners must have utilized the net proceeds to expand its
stronghold in the Brazilian toll roads, which have the potential
to generate risk adjusted return in the range of 12-15% in the
Brookfield Infrastructure Partners currently has a Zacks Rank #3
(Hold). Other operators in the sector having a favorable Zacks
NV Energy, Inc.
PNM Resources, Inc.
). All these stocks retain a Zacks Rank #2 (Buy).