Fundraising

Brookfield/Abertis start OHL Brazil acquisition

The two partners have signed a definitive agreement to buy 60% of the toll road operator. The deal – estimated at $1.7bn – is a strategic boon for both Brookfield and Abertis and could yet prompt a full takeover of OHL Brazil.

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Brookfield Infrastructure Partners (BIP) and Abertis have made good on their previously announced intention and signed a definitive agreement to acquire a majority stake in Obrascon Huarte Lain Brasil (OHL Brazil), a market-leading toll road operator in the South American country, for about $1.7 billion.

BIP said the $1.7 billion disbursement amounted to $1.1 billion in equity and $600 million in liabilities assumed. According to Brookfield, BIP will own 49 percent of the consortium acquiring the OHL Brazil stake, with Abertis taking a 51 percent stake in the vehicle. 

The deal will also involve a share swap that will see Spanish developer OHL, the parent company of OHL Brazil, own 15 percent of Abertis when the transaction closes later this year.

Abertis said the purchase values OHL Brazil at 7x its enterprise value/earnings before interest, tax, depreciation and amortisation (EBTIDA).

In addition, the Brazilian regulator might still force the Brookfield/Abertis consortium to launch a takeover bid for publicly listed OHL Brazil, which would elevate the size of the deal. BIP said it plans to invest an initial $250 million in the acquisition, but warned that amount might increase if a follow-on offer becomes necessary.

BIP, a publicly listed infrastructure investment fund owned by Brookfield Asset Management (BAM), in a recently revealed plan is rejigging its portfolio to focus on core infrastructure, such as transportation.

The subsidiary of Toronto-headquartered BAM last week admitted that timber, considered a non-core holding, could be de-emphasised as a result of its asset reallocation. Owning timber figured prominently when Brookfield spun off BIP in 2008.

Instead, transportation infrastructure, such as OHL Brazil and recently purchased Autopista Vespucio Norte (AVN), in Chile, would constitute the bulwark of BIP going forward.

Meanwhile, Abertis, a multi-billion dollar conglomerate, is out to geographically diversify its business in a bid to become less reliant on its native Spain, where revenue toll road traffic has been in decline.

Brookfield said OHL is poised to benefit from a spike in traffic in Brazil.