São Paulo is the largest market for the lottery sector and, in November last year after a fierce bidding process that included requests for clarification and attempts to amend the International Bidding Notice, the Consórcio Aposta Vencedora — comprising SAV Participações and AXB4 Sistemas de Informática, with former Ministry of Economy secretary Alexandre Manoel as one of the partners — won the license for R$ 600 million (US$106m) in an auction held at B3.
On December 13, the bidding process was ratified by the São Paulo State Department of Partnerships and Investments.
The deadline for meeting all requirements, including payment of the R$ 600 million, was 60 days, extendable by another 60. However, the Consortium only paid R$ 3.3 million as a deposit guarantee for its proposal. Before the final deadline expired, the Aposta Vencedora Consortium requested an extension to pay the R$ 600 million (US$106m).
The Department of Partnerships and Investments granted a 10-day extension, but the Consortium still failed to meet the financial requirement.
"The first-place bidder was unable to meet the requirements of the notice, which provided for 60 days plus another 60 days to pay the license fee. They asked for an extension, and we granted an additional 10 business days, which is our standard, and they still couldn’t comply. So we are declaring that they cannot take over, and we will enforce the proposal guarantee," said Rafael Benini, Secretary of Partnerships and Investments.
"Since they failed to comply with the requirements, we will execute the deposit guarantee to cover the expenses incurred by the State in the bidding process, as stipulated in the notice," Benini added. This will be the penalty faced by the group.
Asked about the possibility of the bidding being taken to court, the secretary stated that, since an additional extension was granted, he does not believe an injunction would be issued in favor of Aposta Vencedora. In his view, any legal challenge is more likely to try to prevent the guarantee from being enforced.
With the disqualification decision published this Thursday (May 8) in the Official Gazette, the government is expected to call the second-place bidder. The SP Loterias Consortium, led by IGT, is next in line and offered R$ 526.5 million (US$92m).
Benini believes the group will be interested, as stated in the notice. "We have information that they are interested. According to the notice, they will have another 60 days to submit documents and pay the license fee. We believe there won’t be any issues, and the contract will be signed after those 60 days."
The 15-year contract requires R$ 333 million (US$59m) in investments. Obligations include the creation of 31 dedicated physical retail points and meeting quality indicators. However, the concession offers flexibility in pricing policy, sales strategy, and the design of lottery services to be created. The reference project also foresees another 11,000 non-exclusive retail points across the state, which can be installed at the concessionaire’s discretion, including the possibility of offering virtual services.
Undisclosed investors
On the day of the auction, the Consórcio Aposta Vencedora stated that the funding would come from investors who could not be disclosed. “They’re people I have business relationships with,” said Felix de Sousa, one of the partners, when asked how he would finance the obligations. He also said, “I’d have to speak with them [the investors] to see if they want to disclose their names,” adding that they were “national companies with long histories.”
At the time, Felix de Sousa also mentioned the group was caught off guard during the auction. “We were surprised. We thought our bid wouldn’t be surpassed, so it caught us off guard, but we already had a plan with potential investors,” he said.
SAV’s partners include Alexandre Manoel Angelo Da Silva, who served as Secretary of Planning, Energy, and Lotteries at the Ministry of Economy from 2019 to 2020.
Another shareholder is Portuguese national Fernando Eduardo Cabral Paes de Sousa Afonso, who has worked in the gaming department of Santa Casa da Misericórdia de Lisboa and is set to become president of the concessionaire. Other shareholders include Guilherme Vilazante Castro and Isadora Vilas Boas Leite.
AX4B Sistemas de Informática is solely owned by Antônio Cesar Felix de Sousa. The company provides technology services and holds several contracts with the public sector.
Source: GMB / Valor
