In 2011, Mattos Filho decided to embrace the infrastructure sector, setting up a practice fully dedicated to clients in the industry. Twelve years on, the firm reclaims its title as Infrastructure Law Firm of the Year in Brazil.
“We now have around 120 professionals working in this practice, which is the fourth largest in the whole company,” says Giovanni Loss, partner at Mattos Filho in São Paulo, who points out that the infrastructure practice is now “even bigger than the capital markets practice.”
In the period recognized by the award, Mattos Filho helped sponsors and financiers close a significant number of ground-breaking transactions in Brazil. Among them was the financing of the GNA II power project (Power Financing of the Year), the financing of the Line 6 concession for São Paulo’s metro system (Infrastructure Financing of the Year – Brazil) and the issuance of a blue bond by BRK Ambiental (Sustainable Infrastructure Financing of the Year).
It managed all of this despite an especially challenging infrastructure market over the past year. While the second half of 2022 saw paralysis in the midst of political uncertainty heading into general elections, the first half of 2023 was especially tough for the sector following the change of government in Brazil, as leftist president Luiz Inácio Lula da Silva took over from right-wing Jair Bolsonaro.
“A new government will always introduce new plans,” Loss says. “As infrastructure is a regulated sector, whenever a new government comes in, no matter if it leans right or left, changes take place.”
While the Bolsonaro administration had a pro-privatization and pro-markets approach, President Lula has put more emphasis on state-led initiatives and government incentives. The new approach was perhaps most apparent in the new stance of development bank BNDES, which has become more involved in the direct provision of funds for infrastructure projects, after years of styling itself as more of a catalyst for mobilizing private capital.
Of course, political change was always going to cause ripples. It almost derailed the acquisition of four oil production fields owned by Petrobras by a subsidiary of the Seacrest Group. The deal was agreed last year, but following the change in administration, Petrobras’ new leadership announced a review of the company’s divestment plans.
“The government even announced that they had cancelled the deal. But the contracts were signed, the financial structure of the acquisition was already set, and the announcement had a huge impact on the buyers’ shares,” he says. “We went to the media, we contacted Petrobras and negotiated with them until the deal was finally closed.”
Mattos Filho has been a particularly active proponent of the energy transition, which in Brazil is moving beyond hydroelectric, solar and wind power towards biofuels, green hydrogen and carbon capture.
“There is a series of projects that are technologically innovative, and they need new contracts and structures,” he says. “They need legal advisors with experience and who are used to working in difficult economic environments.”
Mattos Filho helped clients to untie knots such as the legal consequences of the shared use of facilities by the GNA II power project and GNA I, another gas plant installed in the same location.
“It generated an interesting discussion on how to segregate the risks of one project so that they would not contaminate the other,” says Mattos Filho partner Pablo Sorj. “Other trends we have seen of late is for projects to employ multiple sources of financing, such as a mix of BNDES credit and debentures, and the entry of multilaterals like the IDB and the IFC. They all create their own sets of discussions.”