CAMILO SALOMON, CHIEF EXECUTIVE OFFICER - GLOBAL INFRASTRUCTURE ADVISORS
1. Tell us about GIA.
GIA is an independent investment bank that employs project finance and rigorous risk management to advise on ideal capital structure and source financing for large-scale infrastructure in emerging markets. GIA comes out of my 30+ years of experience in the industry and region, to offer the upside of investing in developing markets without the associated high levels of risk. It’s founded on the principle that to meet the world’s infrastructure needs given population growth and to be truly sustainable, there needs to be a paradigm shift towards more systemic thinking in the way we build. We engrain Environmental, Social, and Governance (ESG) assessment into every part of our methodology because we see a direct correlation between the mitigation of ESG risks and not the viability, sustainability, and value of the project.
2. What sectors are the most promising in Latin America?
Each country has different needs and capacities, and every sector is promising somewhere in the region. The opportunity in Latin America lies in the integration and coupling of assets. We should be going beyond the diversification of assets for diversifications sake and think about assets intentionally and in conjunction with one another. If we are building a hospital, how might that hospital also be a source of potable water and energy? How might we be opportunistic in the construction of a wastewater system to include other public works, or a fiber network? Our approach has us not only asking if a project is a good project, but also if it’s the right project, and even further how it can be the most valuable asset for its community.
3. A slightly different question, where is the greatest need?
Another very promising thing in the region right now is that there is ample opportunity for financing. The Asian Infrastructure Investment Bank (AIIB). AIIB has 100 billion dollars of committed capital to invest in infrastructure projects, and at the moment only 20% of that has been deployed. The bottleneck doesn’t lie in the amount of money available, but in the lack of industry-specific expertise needed to guide projects from the early stages to a point where they are viable investments in markets that can be intimidatingly risky for institutional investors. What we need to close that gap is to shepherd projects from an early stage to the point where it’s “shovel ready”, bringing in the right players and most qualified players—for design, construction, project management, social and environmental impact management— that can give institutionals the confidence in the fundamentals and separates a good EPC contract from a bad one, ultimately leading to an ideal capital structure with a project with minimal risk.
4. For there to be a Renaissance in Latin American infrastructure, what is required?
Latin America is experiencing a lack of confidence in infrastructure development due to scandal and corruption. Rule of law leads to stability, stability enables investment, and thoughtful investment catalyzes development. This year, ten different countries in the region are holding elections for new leaders and transparency and the eradication of corruption will play pivotal roles in nearly all of those. The trust, and consecutively the support of the communities and ultimately users, for the development of infrastructure is the key component missing. In order to reinvigorate the confidence in construction of infrastructure assets, the legislative environment of the region must be driven by transparency, accountability, and impact. The importance of organizational reputation Latin America has the possibility of falling behind or of being a frontrunner of this new era of trust driven by technology.