It is common to find Miguel Setas at financial market events talking about plans and CCR for the next decade, which he calls “Ambition 2035”. Dialogue with investors has become a routine for the 53-year-old Portuguese executive, since he began commanding one of the largest mobility companies in Latin America, in April 2023.
In his interactions, Setas always shows a lot of pragmatism: it is necessary to reconcile double-digit growth per year, secure new concessions and keep debt under control. This speech will be put to the test once again this week – the highlight of the year’s agenda for the infrastructure sector –, when two highways will be put up for auction, with a demand of R$13.2 billion in investments. In at least one of the competitions, the participation of large playersincluding CCR, which does not have a concession three years ago.
“We have our house in order to be competitive in auctions”, stated Miguel Setas in a quick conversation with the InvestNews. As usual, the executive revealed whether the company will participate in the disputes for Rota Sorocabana and Rota do Zebu, which take place this Wednesday (30) and Thursday (31). “On Friday, you will know.”
CCR is a mobility giant that brings together more than 30 infrastructure assets, including highways, urban trains and airports. On roads alone, there are 3,615 km managed in five states (São Paulo, Rio de Janeiro, Rio Grande do Sul, Mato Grosso do Sul and Santa Catarina). But CCR’s last victory in a concession auction was in October 2021, when renewed the management of Dutra (BR-116) for another 30 years for R$1.76 billion and making a commitment to invest another R$25 billion in the highway, one of the main roads in the country.
Dutra’s renewal put an end to a strong investment cycle that began in 2018 and lasted almost three years. During this period, the company won 20 new concessions between highways, airports and trains and saw its net debt jump 77.2% in the period, from R$11.8 billion at the end of 2017 to R$20.9 billion at the end of 2021.
Today, net debt is R$24.9 billion, although leverage (proportion of net debt in relation to operating profit/EBITDA) is around 3 times, a number still considered healthy by the company. The ceiling imposed by the company for this indicator is 3.5 times.
Still, the debt escalation triggered a series of changes at CCR. With the change in interest rates starting in 2021 – Selic rose from 2% to 13.75% per year – capital-intensive companies turned inward to prioritize liability management. Objective that was reinforced at CCR with the arrival of Itaúsafrom Setúbal, and Votorantimby Ermírio de Moraes, in early 2022. The strong duo became part of the company’s control block together with the groups Mover (ex-Camargo Corrêa) and Soares Penido.
After the entry of Setúbal and Ermínio de Moraes into CCR, cost and efficiency management and the search for return on investments gained even more attention, said Setas few months after taking over. His first move was to change the board, reducing the number of senior executives from 11 to seven (C-levels), in a model that brought greater agility to decision-making to cover the more than R$33 billion in investments for the coming years.
Another characteristic of the new phase of CCR is greater selectivity in investments. And this translated into timid participation in the most recent auctions. “It is our obligation to evaluate all concession notices, but that does not necessarily mean that we have to enter into all of them”, defended Setas in an interview last year.
In the last auction in which CCR participated, held at the end of September, the company made the lowest bid among those competing for the concession of the Rota dos Cristais (federal highway that goes from Belo Horizonte to Cristalina, in Goiás). The winner was the French Vinci Highways with a substantially larger proposal that gives CCR.
Symptomatically, competition grew in this phase of CCR’s retraction. In addition to foreign investors, infrastructure funds were those that dominated concession auctions in recent years, occupying a space left by CCR itself and the Ecorodoviasanother traditional concessionaire that has not won a new concession since September 2022.
Setas recognizes that fierce competition puts even more pressure on dealership margins. On the other hand, he says that there is room for everyone, since the percentage of highways granted in Brazil is still low compared to other more developed countries.
“We carry out a risk and return assessment, and this leads us to direct our attention to concessions that offer better conditions to develop the business and to the type of contractual relationships that we understand have a more controlled level of risk”, said Setas , in a conversation with investors promoted by the Galapagos management company last month.
Country of heart
An executive trained in the energy sector, Portuguese Miguel Setas has unique knowledge of regulated markets, in which the mobility sector is included. His first visit to Brazil was in 2008. He arrived in the country to run the distribution business of EDP (formerly Energias de Portugal). Between 2014 and 2021, he was the CEO of EDP Brasil, until returning to Portugal to assume one of the vice-presidencies at the headquarters.
Married to a Brazilian, the executive ended up creating roots in the country. And this contributed to him accepting CCR’s call to return. His interest in the country goes beyond family ties: Setas is an enthusiast of the thesis that Brazil can lead the world’s energy transition.
Last year, he launched the book “Giant by its own nature”, which brings his impressions about the country and the potential of our “green economy”. “Brazil’s leaders need to become aware of this golden opportunity, so that we can occupy our space in the world. We need to overcome our mongrel syndrome a little bit,” the executive told Brazil Journal already release time.
Concessions week
Five major concession auctions are planned for this week: the Public-Private Partnership (PPP) for the construction of schools in the interior of São Paulo, which will have one of the lots auctioned this Tuesday (29) and expects R$ 1.06 billion in investments. On Wednesday (30), it is time for the auction of basic sanitation services in Piauí, which should attract Aegea and Iguáand requires R$8.6 billion in investments over 35 years of concession.
Also on Wednesday, the main infrastructure auction of the week will take place, that of Rota Sorocabana, a set of 12 highways, with 460 km of state highways in São Paulo and covering Castelo Branco and Raposo Tavares.
To take over management of the asset for 30 years, in addition to paying for the concession right, there will be a demand of R$8.8 billion in investments. Sorocabana is one of the spin-offs of a CCR concession, ViaOeste, which will be extinguished after the auction of this lot and Nova Raposo, scheduled for next month. Given the importance of the asset, the participation of companies is expected pureblood of the activity.
Another highway that will be granted is the Rota do Zebu, a section of BR-262 in Minas Gerais, which passes through an important region producing Nelore cattle, the most bred zebu breed in the country. To manage the road for 30 years, the winner of the auction will have to assume R$4.4 billion in investments. Finally, the week ends, on Friday (1), the São Paulo state lottery concession, with R$ 332.7 million in capex.
