Clifford Chance

Clifford Chance advises IDB Invest and Proparco on Águas do Rio clean water and sanitation projects in Rio de Janeiro, Brazil

Global law firm Clifford Chance has advised the Inter-American Investment Corporation (IDB Invest) and Société de Promotion et de Participation pour la Coopération Economique (Proparco) as lender and guarantor, respectively, in connection with the financing by IDB Invest of a long-term local currency loan package for up to R$1,500 million (~$300 million) to Águas do Rio 1 and Águas do Rio 4 (together, Águas do Rio). Águas do Rio are concessions of Aegea Group, Brazil's largest private sanitation company.

According to the terms of the financing, Proparco will provide a R$500 million (~$100 million) guarantee to IDB Invest. Both IDB Invest and Proparco's support are combined with additional sources of financing, including from Brazilian development bank BNDES, private banks and the local capital market. Both concessions will also incorporate performance-driven incentives, totaling a potential of US$15 million from the United Kingdom Sustainable Infrastructure Program aimed at promoting greenhouse gas reduction outcomes through a series of investment and operational milestones.

The Águas do Rio concessions represent a cornerstone investment in the water and sanitation sector which aims to enhance services in 27 municipalities in the State of Rio de Janeiro, Brazil, and will benefit a total of 10 million people, including vulnerable communities. The project includes rehabilitation, maintenance and expansion of sanitation infrastructure and water distribution, including new water and sewage pipelines.

The financing framework of the loan is a product of the collaborative endeavors of IDB Invest and Proparco to create inventive strategies for bolstering water and sanitation initiatives in Brazil. This combined approach of a long-term local currency loan provided by IDB Invest and the guarantee of Proparco seeks to tap into the potential of Development Financial Institutions by mobilizing resources in US dollars and euros towards projects denominated in local currencies across Latin America.

This transaction is part of the largest cycle of investment in Brazil's sanitation sector to date and is expected to contribute to and promote the following UN Sustainable Development Goals:

• Good Health and Well-Being (SDG 3)
• Clean Water and Sanitation (SDG 6)
• Decent Work and Economic Growth (SDG 8)
• Resilient Infrastructure (SDG 9)
• Sustainable Cities and Communities (SDG 11)
• Climate Action (SDG 13)
• Partnerships for the Goals (SDG 17)

Partner Fabricio Longhin led the team, which included partner Jessica Springsteen and counsel Patricio Abal in Washington, DC, associates Fernando Liu and Barbara Silva in New York and associate Mari Correa in Washington, DC. Tax support was provided by partner Avrohom Gelber in New York.