Developing high-quality infrastructure assets requires regional knowledge
Despite the abundance of opportunities, there are potential obstacles beyond the current macro environment for interested investors, says Morales. “Success relies on familiarity with the region and an ability to navigate the unique complexities involved – whether that’s in licencing, working with regulators, communities, finding local partners or understanding cultural and linguistic nuances.”
For instance, while Spanish and Portuguese are the primary languages spoken across the region, enormous cultural and historical differences exist both between and within countries themselves. These often shape attitudes around government, business and foreign investment.
Additionally, not all countries will be equally receptive to the same types of investment agreements. Kevin Nobels, who recently joined Macquarie Capital as Managing Director to expand the business’s presence in Brazil, points out that while some countries, including Brazil, have seen enormous progress towards and government support for Public Private Partnerships (PPPs), others, like Colombia and Chile, have more favorable conditions to execute direct investments or corporate partnerships. Investors need to have a deep understanding of each country’s political and economic environment to properly assess the most successful investment approach.
Finally, Morales notes, in most parts of Latam, trust and relationships in the business context need to be built over time.
Investors must be prepared to properly assess these challenges and having an ‘on the ground presence’ in the region can be hugely beneficial. This, he says, is what led Macquarie to invest further in its presence in Santiago, establishing a new office that brought its teams together under one roof in Chile.
Nobels echoes this sentiment, saying, “The Brazilian market is significant and represents an enormous opportunity, but requires an understanding of the local dynamic and finding the right partners, and for investors to be comfortable with volatility and complexity and to have a long-term, through-cycle view.”