Eletromidia won the two main lots in the urban furniture auction in the city of Rio de Janeiro — consolidating its leadership position in the ‘out of home’ media market with a strategic asset and high revenue potential.
The company offered to pay a fee of R$ 888 million for the two lots, an average premium of 73.7%.
For the first lot — which includes bus shelters and advertising panels — Eletromidia offered R$ 458.6 million, a premium of only 5% over the initial auction value.
The third lot — the Bike Rio advertising screens — went to JC Decaux, who paid R$ 203 million, a premium of 153%.
The fourth lot had no interested parties; it included BRT stations and terminals.
The concession will last for 20 years and the operation of the assets will begin in 2027. Winners will have to pay 50% of the fee upon signing the contract and the rest throughout the concession.
The big surprise of the auction was the presence of Helloo — the media company of Allos, the giant of shopping centers. Helloo participated through a consortium with Kallas, a traditional company in the sector.
Although they did not win any lots, Helloo made aggressive offers, showing their intention to grow in this market.
“This is the largest tender in our industry in the last 10 years, and it marks our entry into the second largest market in the country,” Eletromidia’s CEO, Alexandre Guerrero, told Brazil Journal.
“We will increase our reach by more than 7 million people per day, with a more structured and standardized offering.”
For an investor in the company, the concession consolidates Eletromidia’s leadership position and demonstrates the maturity of the ‘out of home’ media market. “Who would have thought 10 years ago that we would see an urban furniture concession raising over R$ 1 billion? Before, the market did not have this magnitude,” he said.
Despite this, some sector players say that Eletromidia paid a high price.
An executive from a competing company said that the urban furniture in Rio de Janeiro is “a very good, fantastic product… but it was sold for twice the value it’s worth.”
According to him, Rio has more competition than São Paulo, as it does not have the Clean City law, allowing, for example, any landowner to erect a billboard or for newspaper stands to sell ads.
“Rio has several ‘out of home’ assets that are not accounted for. This will compete with a media that will have to be sold at a high value to cover the operating costs,” said the executive.
He also noted that Eletromidia bought Ótima — which has the concession for bus shelters in São Paulo — for around R$ 400 million in 2021, the same value paid in today’s concession for the shelters in Rio. “But São Paulo is a much larger market than Rio.”
Guerrero, the CEO of Eletromidia, said that the two things are not comparable, as Ótima’s capex was much higher than the capex Eletromidia will have with the bus shelters in Rio.
“The operation in São Paulo, between shelters and totems, consists of over 14,000 units. In Rio, the capex will be only 1,800 shelters,” he said.
The CEO also said that competition in Rio is indeed higher, but that usually urban furniture concessions lead to greater market regulation.
Eletromidia is projecting that the concession will initially add 2,500 screens to its operation, potentially reaching 8,000. Currently, the company has 6,000 screens in its street vertical, accounting for over 50% of revenue and having a higher margin than other segments.
The company does not disclose the exact expected IRR, but said they always aim for a minimum of 20% IRR in all projects they enter.
The operation will have a significant impact on Eletromidia’s leverage, which is currently at 1x EBITDA and is expected to rise to 2.1x — still below the company’s covenants of 3x.
Eletromidia is valued at R$ 2.4 billion on the stock exchange. The share has risen 24% in the last 12 months. Globo owns 27% of the company.
Source
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
