August 27, 2019 / 9:12 PM / 25 days ago

After $1.2 bln outlay, Brazil's Hidrovias exploring expansion options - exec

SAO PAULO, Aug 27 (Reuters) - Brazil’s Hidrovias do Brasil SA, one of the country’s largest logistics operators, is mulling options to grow its northern and southern river transportation businesses as it braces for a second wave of expansion, a company executive said in an interview.

In the past nine years, Hidrovias has invested $1.2 billion to set up waterway logistics infrastructure in the Amazon river basin and in the Paraná-Paraguay river system. In those systems it moves grains, iron ore, bauxite and pulp, among other commodities.

“With capex about half the original, I can practically double capacity to move cargo in the North,” Fabio Schettino, the company’s chief financial officer, told Reuters on Monday.

After signing long-term, take-or-pay contracts with clients like miner Vale SA and Chinese grain trader COFCO , Schettino said Hidrovias “delivered its original business plan on time and on budget”, adding now the company wants more.

Boosting business in the North Corridor, which links top farm state Mato Grosso to ports in Northern Brazil, is a priority as the country remains one of the world’s largest grain producer. In the southern Paraná-Paraguay waterway, where competition is fiercer and players are well established, Hidrovias is in a position to buy rivals and increase market share, he said.

“We barely touched (the surface of) the opportunities. We are structuring ourselves for the second moment of value creation,” Schettino said.

Hidrovias has engaged advisers to evaluate strategic options, identify potential acquisition targets, alternatives to access capital markets and portfolio expansion opportunities.

A potential bid to operate “Ferrogrão,” a railway the Brazilian government is soon expected to auction, is also in the cards as long as Hidrovias can find a partner for the venture, Schettino said.

Ferrogrão, which may take 10 years to build, will run from Sinop, in Mato Grosso, to Miritituba on the Tapajós River where barges will carry crops for shipment on the Amazon and out to world markets.

Asked whether Hidrovias would consider listing shares on the stock market and where it could pursue such a plan, Schettino said no decision has been made though the firm could carry out an initial public offering (IPO) in any market.

He also noted the firm, which is owned by private equity firms, replaced project finance loans with a $600 million bond, a move that gave it “an adequate” capital structure.

“Should we stay the size we are?” Schettino asked. “Obviously this is not our strategic decision.” (Reporting by Ana Mano; Editing by Lisa Shumaker)

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