Uruguay's No.1 Construction Firm Smells Opportunity in Argentina

(Bloomberg) -- Uruguay’s largest construction firm is scouting for highway, rail and energy projects in Argentina even as South America’s second-largest economy slips into a recession and a corruption scandal stalls investment.

“Sometimes it’s better to enter at the bottom than when the party has already started,” said Alejandro Ruibal, Saceem’s commercial and operations vice president. “If we identify an opportunity with a good partner we could participate in a tender in the next six months.”

The $57.1 billion credit line that President Mauricio Macri negotiated with the International Monetary Fund could give a badly needed boost to the construction industry. The IMF loan is set to free up between $3 billion and $4 billion in private capital to finance infrastructure projects that have been delayed by the corruption probe, Santiago Carregal, chairman of the country’s biggest law firm Marval, O’Farrell & Mairal, told Bloomberg this week.

At the same time, Ruibal is encouraged by Macri´s emphasis on transparency and rooting out graft after the probe ensnared some of Argentina’s largest companies for allegedly paying kickbacks to previous governments to win contracts.

“Not too long ago Argentina would have never occurred to us because it wasn’t a country that had clear rules of the game,” Ruibal said in an interview. “They are having problems managing the economy, but I think the government is still committed to transparent rules.”

Moving Overseas

Peru and Paraguay now contribute about a quarter of Saceem’s annual revenue after the closely held company decided to expand outside of Uruguay two years ago.

New governments in Peru and Paraguay are expected to give added impetus to public works in 2019, Ruibal said.

Back at home, Uruguay’s construction industry should post moderate growth over the next three years thanks to a government railroad project and if Finland’s UPM pushes ahead with a multi-billion dollar pulp mill, Ruibal said. Saceem is a member of the consortium that submitted the only qualified bid in the rail tender.

Saceem’s project pipeline should lift sales to approx. $300 million in each of the next two years from an estimated $220 million in 2018, Ruibal said.

To contact the reporter on this story: Ken Parks in Montevideo at kparks8@bloomberg.net

To contact the editors responsible for this story: Rita Nazareth at rnazareth@bloomberg.net, Philip Sanders, Andres R. Martinez

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