History

Direcional was founded on February 19, 1981, by Ricardo Valadares Gontijo, who was already a renowned and prominent figure in Brazil´s civil construction market due to the extensive volume of projects in the low-income segment he oversaw as Construction Director at Andrade Valladares.

The company began its journey in Belo Horizonte, developing and constructing small-scale low-income housing projects, as well as undertaking construction projects for the public sector. In the mid-1980s, Direcional embarked on consolidating its brand in the state of Minas Gerais. With its presence firmly established in the state capital, the company successfully participated in and won major public tenders for infrastructure projects across various municipalities in the state, primarily in sanitation and healthcare sectors. In addition, Direcional completed numerous private sector contracts for major corporations.

In 1992, the company expanded beyond Minas Gerais with its first project in Brasília. Throughout its history, Direcional has formed numerous partnerships with Caixa Econômica Federal (CEF) to finance projects aimed at economically disadvantaged households, gaining extensive experience in navigating the legal frameworks associated with CEF-administered housing programs.

In 2001, a new milestone was achieved with the launch of the first project in Campinas, São Paulo. Concurrently, the company gradually entered new markets, including Rio de Janeiro, Espírito Santo, and satellite cities of the Federal District.

In 2006, Direcional expanded into Brazil’s northern region, launching a project in Manaus consisting of 1,984 housing units and comprehensive infrastructure, including leisure facilities, green spaces, institutional zones, and commercial areas.

On February 29, 2008, the company completed its registration as a publicly traded company with the Brazilian Securities and Exchange Commission (CVM). The following month, the Tarpon Real Estate Fund subscribed to 25% of the company’s issued shares.

In July 2008, Direcional established Direcional Vendas, a wholly-owned subsidiary focused on the intermediation of real estate sales, purchases, and leases, as well as providing real estate consultancy services.

As of July 2009, Direcional was ranked the 5th largest construction company in Brazil by launched square meters and the 6th largest by square meters under construction, according to O Empreiteiro, a leading industry magazine.

In November 2009, Direcional successfully completed a 100% primary Initial Public Offering (IPO), raising BRL 274 million and listing the company on the Novo Mercado, the highest level of corporate governance on the BM&FBOVESPA, now B3. The proceeds were allocated entirely to the expansion of the company’s operational activities.

In February 2011, the company concluded a successful follow-on offering, issuing 20.8 million new shares in the primary market and selling 7.2 million shares through a secondary offering by the controlling shareholder. The company raised gross proceeds of BRL 228.8 million, which were primarily used for land acquisition and project launches in the affordable housing segment, supporting its growth strategy for the following years.

That same year, Direcional adopted the “Associative Model” (Modelo Associativo) for the Minha Casa Minha Vida (MCMV) Program’s Faixa 2 and Faixa 3 projects. In this model, purchase agreements are only signed after the client’s credit is approved by the financing bank, significantly reducing the risk of cancellations.

By 2012, the company had become one of the leading players in the MCMV program, with a total of 24,254 contracted units—23,234 of which were in Faixa 1, and 1,020 in the other tiers totaling BRL 1.8 billion in PSV

In subsequent years, Direcional maintained its leadership position in the segment. In 2013, the company contracted 34,554 additional units in the program, totaling BRL 2 billion in PSV, reflecting a 42% increase in the number of units compared to 2012. Furthermore, the company was ranked the 3rd largest construction company in Brazil by total built area in the 2013 ITC ranking. By 2014, the company had achieved a 10% market share in Faixa 1 of the MCMV program.

Since the start of the MCMV program, Direcional has contracted 36 projects under Faixa 1, totaling BRL 5.8 billion in PSV and over 91,000 units, with an average of 2,532 units per construction site. Direcional is the company with the most contracted projects in this tier, holding a 5% share in the first and second phases of the program.

Between late 2014 and early 2015, the company strategically increased its focus on products targeting Faixa 1.5, 2, and 3 of the program, leveraging (i) the industrialized, low-cost construction model used in Faixa 1, (ii) the ability to transfer customers simultaneously with sales (Modelo Associativo), reducing the risk of cancellations and minimizing the use of internal capital, and (iii) funding from the FGTS (Workers’ Severance Guarantee Fund). This approach, allowed the company to meet the growing demand for affordable housing.

This strategic shift resulted in strong operational performance in the following years, with record PSV launches and sales in Faixa 2 and 3. As the company’s projects progressed and construction cycles unfolded, the eligible land bank expansion reinforced our competitive advantage in the program, leading to significant revenue growth across these segments. Throughout these years, Direcional consistently ranked as Brazil’s 2nd largest construction company in the ITC rankings, underscoring the company’s sustained excellence and leadership within the industry.

The year 2018 marked a pivotal moment for Direcional, highlighted by the pioneering divestment of 11 Special Purpose Entities (SPEs) from the MAC (High-end, Mid-range and commercial) segment to a real estate investment fund. This transaction represented a key milestone in Directional’s strategic shift toward the affordable housing market, particularly in Faixa 2 and 3 of the MCMV program, and played a critical role in repositioning the company toward a more Capital-efficient profile, further validating a more liquidity-focused strategy outlined between 2014 and 2015.

In 2020, the unforeseen challenges brought by the COVID-19 pandemic required individuals, businesses, and governments to adapt to a new reality. In response, Direcional established a crisis committee, with a primary focus on implementing health and safety measures for employees, clients, and partners, while supporting the management of other critical actions to ensure the continuity of operations. On construction sites, safety protocols were reinforced, and remote work was adopted for most administrative functions. Strengthening the cash position, reducing expenses, and accelerating the adoption of digital technologies to drive sales—given the restrictions on in-person interactions—were key factors that enabled the company to navigate this challenging period successfully.

The year 2020 also marked an important step towards operational expansion. Through its subsidiary, Riva Incorporadora S/A, Direcional entered the mid-market housing segment, offering select products to an underserved portion of the population. Riva’s pioneering approach in addressing this pent-up demand contributed significantly to the success of the business model. By maintaining separate sales teams and capitalizing on efficiency gains from Directional’s established operational structure, the group maintained its core focus on operational excellence, achieving further impressive operational and financial records.

In March 2021, Standard & Poor’s Global Ratings upgraded Direcional’s issuer credit rating to brAAA. The achievement of the Triple A rating underscored the seriousness and dedication that have always guided the company’s operations, reinforcing its commitment to responsible management, operational efficiency, and a long-term vision.

In December of the same year, the company announced the launch of Direto, a joint venture with XP Inc. aimed at operating across various segments of the real estate credit market, including (i) the intermediation of loans for individuals, in partnership with other financial institutions, to facilitate the acquisition of new and used properties; (ii) home equity loans; and (iii) the intermediation of receivables portfolios from real estate sales between developers or construction companies and the buyers. The partnership was approved by Brazil’s Administrative Council for Economic Defense (CADE) in early 2022.

Despite the ongoing challenging environment in 2022, Direcional exceeded previously established benchmarks, achieving BRL 3.6 billion in PSV launches and BRL 3 billion in net sales, setting new records for these metrics. Net revenue reached BRL 2.2 billion, with an adjusted gross margin of 35.6%, demonstrating the company’s resilience, which has been evident in recent years. Net income for the year totaled BRL 209 million (adjusted net income was BRL 205 million, after excluding non-recurring items). In this context, the adjusted annualized ROE reached 16% in the fourth quarter of 2022.

In 2023, Standard & Poor’s Global Ratings reaffirmed Direcional’s brAAA credit rating on the National Brazil Scale, maintaining a stable outlook. The rating highlighted the company’s solid performance in the construction sector, emphasizing the strong results achieved in recent years and robust profitability. The report also noted Direcional’s strong cash generation, efficient working capital management, and favorable project cycle.

Later in 2023, recognizing a favorable window of opportunity due to the improvements implemented in the MCMV program and the strong operational performance of the company, Direcional successfully carried out another public offering of primary shares—the first follow-on in the sector since 2020. Approximately BRL 429 million was raised, aimed at supporting the growth of the Direcional group and optimizing its capital structure.

As a result, in 2023, the company launched a total of BRL 4.9 billion in PSV (BRL 4.3 billion % Company) and achieved BRL 4.0 billion in net sales (BRL 3.1 billion % Company), reaching the highest levels in its history. Net revenue totaled BRL 2.4 billion, and net income reached BRL 387 million (of which BRL 332 million were attributable to the company’s shareholders, representing a net margin of 14%).

It is also worth noting that, since its IPO, Direcional has surpassed the milestone of BRL 1.2 billion in capital returned to shareholders—through dividends and share buybacks—thereby securing a leading position in these areas.

In both favorable conditions and uncertain or volatile environments, the Direcional Group has demonstrated resilience and adaptability, consistently delivering solid results and underscoring the company’s recognized ability to build efficiently through a winning construction method and strict cost control, with a constant focus on generating returns for shareholders and society, while continuously improving its commercial strategy, sales flow, and customer experience.