Brazil’s infrastructure sector is navigating a period of significant regulatory changes and heightened private investment activity, market players said during the Expert XP conference.

Speaking in the event held by XP Investimentos in São Paulo on 26 July, Getúlio Lobo, head of fixed income at XP, described the current environment as a “moment of effervescence” in the local infrastructure market.

Lobo and other executives pointed to a robust pipeline of highway concessions, major regulatory changes affecting the power sector, a pressing need for billions more in sanitation investments and digital infrastructure projects as areas where they’re seeing intense investment activity.

On the road again

Lobo noted that the Brazilian highway sector presents a wealth of opportunity with the government planning to auction 16 highway concessions in 2025 and 12 to 15 more in 2026.

Tulio Machado, head of infrastructure at XP Asset, highlighted the emergence of new entrants in this segment, including his firm, XP Investimentos. Machado observed that the asset manager has participated in three previous auctions for highway contracts and that it continues to study opportunities in the sector.

Machado said that traditional highway operators have been less active in recent auctions due to capex constraints, which has created space for new entrants. He also highlighted government initiatives such as risk-sharing mechanisms and renegotiation frameworks as improvements in the risk allocation for projects.

Power markets continue to surge

The power sector is undergoing a major reform, primarily driven by Provisional Measure (MP) 1300, which aims to open up the low-voltage energy market to private investment and reform the sector’s regulation. “This MP 1300 was long awaited and one of the main themes is market opening,” Machado observed. “It will be scrutinized by Congress, but it has over 600 amendments,” he cautioned.

Brazil’s power authorities are also assessing ways to address curtailment issues and how that is affecting the renewables segment. Machado said he expects a solution to the curtailment issue soon.

Samer Sehan, CIO and partner at alternative asset manager Jive Mauá, observed that the local power market is undergoing a restructuring process. “With the market opening, all the segments are reorganizing on the board,” Sehan stated. He pointed to new opportunities arising from this shift, including generators acquiring traders and traders investing in renewables.

Antonio Pedro Teixeira, partner and portfolio manager of the infrastructure credit funds at JGP asset management firm, noted that there are still uncertainties surrounding future regulatory changes, specifically with the potential end of the wire tariff subsidies for distributed generation projects. The measure would result in charging fees to remunerate the use of the electricity distribution infrastructure and Teixeira indicated that such an approval would result in the review of existing investments.

Sanitation investors cleaning up

On the water and sewage front, Lobo estimated the country still requires nearly BRL 900bn (USD 160bn) in investments by 2033 to achieve the goal of universal access to sanitation set by the Brazilian legislature. To achieve those goals, there needs to be added pressure on lenders, the capital markets and public banks to fill the funding gap, Teixeira said.

“We see smaller projects being structured and it will demand a careful analysis to understand their financial feasibility,” he added.

The solid waste segment also provides opportunities. Lobo described it as “an ugly duckling” for many years that is now a great avenue of opportunities with biogas and waste-to-energy projects providing greater diversity of solutions.

Other sectors demand capital

Digital infrastructure is another area where investors are expecting significant growth. Sehan highlighted the “growing demand for fiber and 5G” technologies while Machado added that “data centers can see exponential demand coupled with the development of AI, fiber and cell towers.”

The discussion also touched on the strategic importance of ports for export and territorial control in Brazil. Social infrastructure Public-Private Partnerships (PPPs), particularly in health and education, are also gaining traction.

“We have seen school and hospital PPPs, and we intend to deploy more capital there in the coming years,” Machado said.

Lobo indicated that social infrastructure, while not representing the largest investment amounts, is “a hot topic with improving governance,” offering opportunities for both debt and equity providers.