By Tatiana Bautzer
SAO PAULO (Reuters) - Increasing caution among state lenders should create room for capital markets instruments to help finance infrastructure projects in Brazil, providing Japanese financial services firm Orix Corp (T:8591) a platform to grow more rapidly in the country after a recent acquisition, a senior executive said in an interview.
Orix, one of Japan's most acquisitive financial firms with more than $300 billion under management, bought Brazilian credit-focused asset manager RB Capital Empreendimentos SA two months ago, in order to expand financing alternatives for real estate and infrastructure firms and projects in Latin America's largest economy.
Moves by Brazil's government to reduce state banks' risk-taking and curb loan book exposure to capital-intensive activities like infrastructure have stifled the supply of financing for the industry. State development bank BNDES has pledged to lend to such projects, although on a smaller scale than a few years ago.
While it is hard to see capital markets taking up the slack left by state and private-sector lenders on the financing of Brazil's much-needed port, airport, logistics and road projects, the ability of firms like Orix and RB Capital to lure global investors should help bridge that gap, Hideto Nishitani, the chief executive of Orix's North American unit, said.
"Global investors look forward to these new investment opportunities", Nishitani said in an interview in RB Capital's São Paulo office on Wednesday.
Increased transparency could also attract more foreign capital to finance Brazil's airports, roads and railroads, Nishitani said, as a result of an ongoing corruption probe into a massive bribery scheme involving recent infrastructure projects.
Investor demand for tax-exempted notes offered solely to finance infrastructure could help drive up financing activity, provided the government and industry players agree on a mechanism to mitigate the impact of currency fluctuations on their investments, according to Marcelo Michaluá, RB Capital's CEO.
"More of these projects, such as ports or railroads, could have part of their revenue linked to foreign currencies," Michaluá said.
Foreign investors are allowed to buy dollar-indexed government bonds, although their popularity remains limited. Reuters reported last week that a currency hedging mechanism will be tested at an upcoming airport auction next month.
RB Capital manages 2.6 billion reais ($848 million) in assets and focuses on real estate and infrastructure investment. Orix, which operates in 37 countries, bought 68 percent of RB Capital for an undisclosed sum.
($1 = 3.07 reais)