GMR may rope in Brazilian construction giant Queiroz Galvao as a partner to bolster its bid to carry out airport modernization projects at some of Brazil's busiest airports, two people directly familiar with the company's bidding plans said.
Queiroz Galvao is one of the largest privately held construction conglomerates in Brazil and had revenues of over $4 billion in 2010 as per details available in the company's annual report. The company also has operations in the areas of real estate development and oil and gas exploration.
GMR may finally bid only for the Guarulhos airport expansion project at Sao Paulo as it is the most lucrative and busiest airport in Brazil, according to one of the people quoted above. The projected capex for the airport modernization project at Guarulhos alone could be close to $8 billion, according to the same person. Brazil's government will also auction off concessions at Viracopos airport in Sao Paulo and the airport in the capital city of Brasilia to bidders selected through an auction process.
GMR has also been in talks with other large Latin American construction companies and will look to finalize a partner within the next two weeks. The company had earlier decided to bid for the projects alone but now believes that a partner with local market knowledge and experience will help it strengthen its proposed bid and also bring in much needed capital as project costs run into billions of dollars and bidding is likely to be very competitive. The company is also in talks to put together a consortium of banks to fund its bid.
The deadline for submitting technical and financial bids for the airport projects has been set at 30th January.
Brazil's government has put in place a plan to modernize airports ahead of the 2014 soccer World Cup and 2016 Olympics that it will host at Rio de Janeiro. Domestic air traffic in Brazil has been growing at double digit rates and airports are frequently overcrowded making the expansion drive necessary to cope with the projected increase in passenger traffic due to these mega sporting events.
A spokesperson for GMR did not respond to emailed queries. Queiroz Galvao could not be reached for comment.
Other large global airport operators including Aeroports de Paris (ADP) which manages the Charles de Gaulle international airport in Paris as well as big investors such as Brazilian billionaire Eike Batista are expected to participate in the auction being conducted for the award of the airport concessions.
Brazil's aviation authority put out stringent conditions for bidders interested in carrying out expansion projects at the airports in October last year. One of such conditions is that Brazil's state-owned airports company Infraero will own 49% of the capital stock of any joint venture that eventually gains the right to re-develop and operate the airports. The conditions also provide Infraero veto rights over "strategic and relevant issues" despite being a minority partner in the proposed joint ventures that will be awarded concessions.
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