Brookfield takes US$350M stake in Brazilian rail and port logistics business

Brookfield Infrastructure (TSX: BIP.UN) says it is joining a number of institutional investors in acquiring a 27 per cent interest in VLI, one of Brazil’s largest rail and port logistics businesses, for the equivalent of US$850 million.

Brookfield Infrastructure says it will invest approximately $350 million. It did not identify the institutional investors.

“We are pleased to be expanding our transport platform by acquiring high quality port and rail assets in South America,” CEO Sam Pollock said in a statement announcing the deal Monday.

“We expect volumes in this business to increase as the economy improves, as customers make use of our surplus capacity and as we pursue expansion opportunities, providing us with attractive future organic growth.”

The terms of Brookfield’s investment include a mechanism to ensure that a minimum return is achieved over a period of up to six years from closing, which is expected to occur in the first half of 2014.

VLI is one of the largest logistics operators in Brazil, providing transport of general cargo in Brazil through an integrated system of railways, ports and inland terminals.