Infrata opens first non-UK office in Colombia
Posted 10/08/2018 by Inframation News - Jonathan Carmody
London-based technical advisory firm Infrata has opened an office in Colombia, its first outside of the UK, to handle booming success in Latin America.
While everything was done from the UK office until now, the company has several transport advisory mandates in Colombia and the decision to relocate employees to the country is led by existing relationships and deals, according to managing director Alonzo Guzman.
“Our decision was in response to the increased demand in the market,” he said. “We will be serving existing lenders and sponsors who need someone to monitor the investment once financial close has been reached.”
“This is a move that has taken about a year to accommodate our clients in what is a unique market for technical advisors,” said Senior consultant Howard Fawcett. “There’s a lot of pressure on concessionaires to obtain financing in Colombia and once financing is secured, there are validation and quality control works to carry out, meaning advisors are far more involved than in other markets.”
Fawcett added that the company is actively recruiting Spanish speakers for both London and Colombia with a focus on Latin America but declined to specify how many positions the company is hiring for.
The Colombian office will cover Infrata’s work in Colombia, Peru, Chile and Paraguay and projects in Uruguay and Argentina will likely move more regionally shortly.
Currently, the firm is mandated on 4G projects Autopista al Mar 2; Bucaramanga-Barrancabermeja-Yondo; Mulaló-Loboguerrero; Puerta de Hierro-Palmar de Varela-Cruz del Viso; Transversal de Sisga; Girardot-Ibagué-Cajamarca; Pamplona-Cúcuta as well as advising Eiffage on the acquisition of the Santana-Mocoa-Neiva highway from CASS Constructores and InfraRed on the acquisition of Construcciones El Cóndor’s stake in the Antioquia-Bolívar highway.
Guzman said that most of the sponsors they work with find themselves in processes where there isn’t enough focus on the timeline for a transaction reaching financial close. “There are issues with the way projects are structured and the transfer of risks,” he said.
Guzman believes that procurement processes should be reconfigured to ensure it’s possible to finance projects by making them more appealing to the private sector.
“For example, in the Lima Metro Line 2 project the risk transfer wasn’t well balanced and there was a ridiculous timetable for completion,” he said. “A lot of companies bid for projects, win and then renegotiate once they’ve won the project, but this makes everything take longer.”
Publishing multiple versions of tender documentation over time with periods for comments and suggestions makes for better, more financeable projects, according to Guzman.
He also believes that in some cases the amounts bidders have to put down to participate in tender processes can prove exclusive for smaller businesses and limits local participation.
“Five years ago, there wasn’t much talk about Latin America, despite its great need for infrastructure. Five years later, we’ve found that many European and American banks are quite active in the region and the political landscape has improved. Governments are learning and listening to the private sector and structuring projects in a more appropriate manner and many governments have now started to develop their first infrastructure programs,” Guzman said.
Guzman expects that there will be more activity in roads and desalination plants and the airport sector, particularly in Caribbean airports.
“We’re also interested in power and generation projects, but at the moment they’re not our bread and butter and any deal would be on a ‘need’ basis from our clients,” he added.
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Infrata conducted technical due diligence for the DBFOM of a 152km highway, connecting Bucaramanga, Bermeja and Yondó. The route includes 2 tunnels (5.96km), and more than 30 viaducts and bridges. A 25-year contract period has been set. The team is currently providing construction monitoring services.