ADIA becomes Intoll’s third-largest shareholder

Abu Dhabi’s sovereign wealth fund has spent some A$225m to acquire 8.6 percent of Intoll, a spin-off from Macquarie Infrastructure Group. In becoming its third-largest shareholder, ADIA has prompted speculation that it may take over the roads vehicle.

The Abu Dhabi Investment Authority (ADIA), Abu Dhabi’s sovereign wealth fund, has acquired an 8.6 percent stake in Intoll, one of the two vehicles to emerge from the split of Macquarie Infrastructure Group (MIG).

ADIA first announced it owned 5.5 percent of Intoll – which it acquired for about A$145 million (€156 million; $203 million) – on May 4 this year. But three days later, the sovereign wealth fund said it had spent another A$80 million to increase its stake in the roads vehicle to close to nine percent. It is now Intoll’s third-largest shareholder after Macquarie Group (18 percent) and Lazard Asset Management (11 percent).

Intoll emerged from the division of MIG as the vehicle containing Macquarie’s less risky and more mature toll road assets:  Canada’s 407 ETR, in which it owns 30 percent, and Sydney’s Westlink M7, in which it has a 25 percent stake. MIG’s other roads – the UK’s M6, France’s APRR, the Chicago Skyway, the Indiana Toll Road and San Diego’s South Bay Expressway – were grouped into Macquarie Atlas Roads.

ADIA’s announcements have prompted some in the market to speculate that it may be considering a takeover bid for Intoll. Will Seddon, an analyst with White Funds Management, told the Sydney Morning Herald (SMH) “there is a reasonable chance that [ADIA] is working towards making an offer”. He added that “they have accumulated quite a lot quickly and our thinking is they want to buy more”.

Austock analyst Andrew Chambers disagrees, though, telling SMH that the sovereign wealth fund would rather look at taking controlling stakes in the assets Intoll holds. “If you were going down the M&A path you would look to Ferrovial’s stake first because it is up for sale. Intoll doesn’t offer control of anything – it has passive stakes in extremely good assets,” he added.

Spanish infrastructure group Ferrovial announced in March this year that it was looking to sell a 10 percent stake in the 407 ETR highway, reducing its holding in the road to 43 percent. It is reportedly seeking some €500 million for the 10 percent holding.