Road Financing of the Year and Infrastructure Financing of the Year-Andes: Autopista al Mar 1

SPONSOR: Devimar (Sacyr, Strabag and Concay)
LOCATION: Antioquia, Colombia
FINANCING TYPE & SIZE: $717 million project financing
BANKS: SMBC, KfW IPEX-Bank, Société Générale, IDB Invest, FDN, ICO, CAF, BlackRock
LAW FIRMS: Paul Hastings, Brigard & Urrutia, Clifford Chance, Godoy y Hoyos, PPU

As Colombia’s Devimar arranged financing for the Autopista al Mar 1 earlier this year, it encountered several obstacles, including the reluctance of local commercial banks to take part in another toll road concession.

“We had some delays with the financing due to market conditions and couldn’t count on the participation of some local banks as a result,” says Devimar CEO Jesús Rodríguez.

Engineering challenges compounded the financing hurdles as Devimar undertook to build a road in a mountainous region, sometimes at altitudes of 1,800 meters, Rodríguez said.

But Devimar managed to put the funding in place nine months after it opened the syndication process, a relatively short amount of time for a project in the fourth generation (4G) of toll road concessions.

Led by SMBC as financial advisor, Devimar found eight lenders willing to take part in a 16.5-year loan for 2.23 trillion Colombian pesos ($664 million), including development banks and commercial lenders.

The local development bank Financiera de Desarrollo Nacional (FDN) directly provided 553 billion pesos and supplied peso-denominated credit lines for the Inter-American Development Bank (IDB), IDB Invest, Instituto de Crédito Oficial (ICO) and BlackRock to add nearly another 1 billion pesos in financing.

In addition, German development bank KfW joined SMBC and Société Générale on a $225 million tranche in US dollars.

“We achieved financing through the introduction of various mechanisms that give security to lenders, which entailed more than 60 reserve accounts, each one supporting a particular risk, such as cost overruns, equity funding issues, social protests and due diligence setbacks,” Rodríguez said.

With construction almost halfway completed, Devimar expects to invest roughly $500 million in total to build the road and around another $1 billion to operate it over the course of the 25-year concession contract, Rodríguez said.