annual report 2017

Conclusion of two major acquisitions were the highlights of the year 2017.

The year of 2017 was one of the major accomplishments for Brookfield in Brazil. Our managed assets in the country reached the mark of BRL 77 billion, almost 80% higher than the amount recorded at the end of 2016. If we consider the last five years, our portfolio in Brazil more than doubled in size. We made a series of important acquisitions in Brazil, two of the most important completed in 2017 were: the acquisition of NTS, a gas transportation company serving the Southeast of Brazil, and BRK Ambiental, the largest private Brazilian water and sewage treatment company, with operations in more than 180 municipalities

The acquisition of a 90% stake in NTS for USD 5.1 billion was one of the largest transactions in the Brazilian market in 2017. The company operates over 2,000 km of gas pipelines, responsible for approximately 50% of gas consumption in Brazil. In early 2018, the transaction was chosen as one of the best business in the Oil & Gas transportation sector in Latin America, by the global award “IJGlobal Deal of the Year”, promoted by Euromoney magazine. During the same period, in its first assessment on NTS, Fitch attributed the company the Long-Term Rating of ‘AAA (bra)’, the North American agency’s best rating for Brazilian companies.

Another highlight of 2017 was the acquisition of a 70% stake in BRK Ambiental for approximately USD 1 billion. This allowed us to enter a segment that has a major development potential in Brazil, which is basic sanitation, since over 50% of the Brazilian population does not have treated sewage. BRK Ambiental operates to the benefit of a population of approximately 15 million people.

In addition to these acquisitions, in 2017 Brookfield established Quantum as the company responsible for the electric power transmission operations in Brazil. In partnership with the Spanish ACS group, we hold concession projects for the construction of 4,310 km of transmission lines, 522 km of which were delivered in 2017 and another 1,144 km will be completed by the end of 2018. The work will require investments of BRL 9 billion and the remaining 2,644 km of lines will be delivered by 2022.

All of these operations show our commitment to investing in high-quality assets with development potential. With almost 120 years of history, our extensive knowledge of the Brazilian market enables us to seek opportunities when the market is less favorable, which allowed us to find valuable investment opportunities at a time when many investors were wary with respect to Brazil. That was also possible thanks to the support of major global investors that joined us in these deals, confirming our capacity to analyze, structure and complete big transactions.

Works of tram line contruction in São Paulo in 1990.

 

Our History

Brookfield’s history is intertwined with the development history of Brazil’s modern infrastructure. In 1899, a group of Canadian investors led by William Mackenzie and Frederick Stark Pearson joined Brazilian investors and created the São Paulo Tramway, Light and Power Company to install and operate public lighting systems and electric-powered mass transit. In 1901, the group inaugurated the Parnaíba Power Plant, the first hydroelectric plant to power the city of São Paulo. In 1905, it expanded its activities to the country’s second largest city with the creation of the Rio de Janeiro Tramway, Light and Power Company. It also invested in gas and telephone systems, becoming Latin America’s largest public utility company by 1925.

Several of the group’s different activities were sold from the 1960s to the 1980s, but we never stopped investing in Brazil, as we migrated from public utility operations to investing in a wide range of industries. Our operations underwent a global restructuring as of the year 2000, when we focused on real estate, infrastructure, renewable power and private equity industries. Today, our operations cover 20 Brazilian states and over 20,000 jobs.

 

 

*Annual compound growth rate