The Canada Pension Plan Investment Board (CPPIB), a Canadian pension fund, has acquired a 10 percent stake in Canada’s 407 ETR toll road, in Toronto, from Spanish infrastructure group Ferrovial.
The 407 ETR
In late August, the directors of Australian-listed toll roads operator Intoll accepted an all-cash takeover offer of €2.4 billion from CPPIB. If Intoll’s shareholders give final approval to CPPIB’s offer, the Canadian pension will acquire Intoll’s 30 percent stake in the 407 ETR, which, together with the minority stake it has just acquired from Ferrovial, will bring its total ownership in the road to 40 percent.
Intoll – whose shareholders include Macquarie (18 percent), Lazard Asset Management (11 percent) and Abu Dhabi Investment Authority (9.9 percent) – also owns a 25 percent stake in Sydney’s Westlink M7 toll road.
Toronto’s 407 ETR is one of Ferrovial’s star assets, held by subsidiary Cintra. During the first half of the year, the toll road generated sales of €214 million, a 12 percent increase in relation to the previous comparable period. Traffic during the first six months of 2010 also grew by 6 percent, Ferrovial pointed out, adding that on June 30 2010, the 407 ETR beat its previous traffic record, set in October 2007, when it was used by 454,275 vehicles.
The toll road is also Intoll’s most important asset, from which it derives 81 percent of proportionate revenue and 80 percent of earnings before interest, tax, depreciation and amortisation (EBITDA). The 407 ETR has 88 years left on its concession contract and has recorded annual toll increases of 7 percent over the last 10 years.
The 10 percent stake sale will allow Ferrovial to book a consolidated net capital gain in its books of €2.47 billion, corresponding to the sale of the minority stake and the valuation of the remaining 43.23 percent it owns in the 407 ETR.
Once the deal closes and the takeover of Intoll gets final approval, Ferrovial, via Cintra, will retain its place at the top of the toll road’s shareholding tree (43.23 percent), with CPPIB (40 percent) closely behind and SNC Lavalin (16.77 percent) the road’s third-largest shareholder.