Goldman/Abertis win Puerto Rico toll road concession

The $1.4bn winning bid includes a $1.1bn upfront payment to the government. Goldman Sachs and Abertis will reach financial close on the deal in September, backed by 12 banks. The team beat competition from a Morgan Stanley-OHL consortium.

A consortium comprised of Goldman Sachs Infrastructure Partners II and Spanish developer Abertis has won the 40-year concession for Puerto Rico’s busiest highway with a bid of $1.4 billion, bringing to a close a year-long procurement process for the US territory’s first toll road public-private partnership (PPP).

The winning consortium, called Autopistas Metropolitanas, has agreed to provide an upfront payment of about $1.1 billion and has also agreed to invest an additional $300 million in the roads over the term of the concession, according to a statement from the Puerto Rico Public Private Partnerships Authority (PPPA).

Abertis said the consortium would finance 40 percent of its bid with equity with the remaining 60 percent to be funded with long-term debt. A group of 12 banks has committed to provide debt for the project, which is expected to reach financial close in September.

Puerto Rico Governor Luis Fortuño said in a statement that this was “an important day for Puerto Rico,” and added that the project marks the first brownfield PPP in the US in five years and the largest US private infrastructure investment this year.

Goldman Sachs and Abertis beat competition from a consortium comprised of Morgan Stanley Infrastructure and OHL, which also submitted a bid for the concession last month. In a statement, the Puerto Rico PPPA said “there was no need to ask the two teams for best-and-final offers given that both bids were more than 5 percent apart from one another”.

The concession involves the financing, renovation, operation and maintenance of two existing toll roads: PR-22, which is Puerto Rico’s most heavily-traveled highway, according to the PPPA, and the smaller PR-5 toll road in the municipality of Bayamón. Both roads recorded an operating revenue of $90 million last year, Abertis said in a statement.

Eight groups responded to a request for qualifications, and the Puerto Rico PPPA shortlisted four consortia for the concession. But shortlisted consortia led by Citi Infrastructure Investors and Brazilian toll road concessionaire CCR eventually declined to submit proposals.

Goldman Sachs Infrastructure Partners II is a $3.1 billion fund formed in 2010. The fund has also invested in toll roads in Mexico, according to the PPPA.

Puerto Rico’s PPP programme was launched in 2009, after Fortuño signed into law legislation enabling PPPs and creating the Puerto Rico PPPA. Funds from the concession will be used in part to retire debt for Puerto Rico Highway and Transportation Authority, according to a statement.

Macquarie Capital acted as financial and procurement advisor to the Puerto Rico PPPA, and Allen & Overy acted as US legal counsel, according to the PPPA website.