By Brazil Stock Guide – Brazil’s upcoming toll road auction for the Rotas Gerais project is poised to attract significant interest from infrastructure operators, as the concession offers above-average returns and a relatively balanced risk profile.
The auction, scheduled for Tuesday (31), covers a 30-year concession for 735 kilometers of highways in the state of Minas Gerais, connecting key logistics corridors and extending to the Bahia border.
The project includes stretches of BR-251 and BR-116, linking cities such as Montes Claros and Governador Valadares. As a brownfield asset, the concession relies on existing infrastructure, reducing execution complexity compared with greenfield developments.
Total investments are estimated at 7.3 billion reais ($1.46 billion), with approximately 53% to be deployed within the first seven years. Operating costs over the concession period are projected at 5.8 billion reais.
Bidders must submit proposals by Thursday (26), with the auction to be awarded based on the highest toll discount offered. A tiered concession fee mechanism will apply, increasing payments as discounts exceed certain thresholds, a structure designed to limit overly aggressive bids.
Despite demand risks—given that the roads are not currently tolled—the project is supported by a regulatory real internal rate of return of 13.76%, above the 9.21% to 12.33% range seen in recent federal auctions.
The investment profile is further supported by a capex structure focused on expansions rather than complex engineering works, alongside expectations of strong EBITDA generation from year one and a less front-loaded capital deployment.
Market participants are expected to compete aggressively, driven by both the project’s economics and its potential to improve leverage metrics. Ecorodovias Infraestrutura e Logística SA (ECOR3) is seen as a likely contender, given the asset’s strategic fit with its portfolio and potential balance sheet benefits.
Motiva Infraestrutura de Mobilidade SA (MOTV3) may show more limited interest, as the project appears less aligned with its current strategy. Other groups that have participated in recent regional auctions, including Vinci and 4UM/Opportunity, could also enter the bidding process.