Hochtief and Strabag close on €410m German road

A club of three commercial banks together with the EIB are providing €298m in debt for a 58-kilometre stretch of the A8 highway, the first project in the second wave of Germany’s A-model highways to reach financial close.

German infrastructure firm Hochtief and Austrian developer Strabag have reached financial close for a stretch of the A8 highway, connecting the German cities of Ulm and Augsburg, to the south of the country.

The project is the first of the Federal Ministry of Transport’s second wave of A-Model highway tenders to reach financial close after it was awarded to the Hochtief/Strabag consortium – a 50/50 joint venture – in April. The 30-year contract will see the private partner build and operate the road, recouping its investment via a share of tolls charged to heavy vehicles. 

The contract is worth €410 million, including €375 million of debt and equity from the consortium and start-up financing from the government.

BBVA (€62 million), Unicredit (€75.8 million) and regional development bank Landeskreditbank Baden-Wurttemberg-Foerderbank (€11.2 million) together with the European Investment Bank (€149 million) are providing €298 million of debt for the project, according to Infrastructure Investor Assets (IIAssets), Infrastructure Investor’s companion database.

The €149 million commercial facility has a tenor of 19 years, with margins varying between 270 basis points and 320 basis points. The project’s debt-to-equity ratio amounts to 79/21, with the Hochtief/Strabag consortium contributing about €79 million of their own equity, according to IIAssets.

The A8 project is not Hochtief or Strabag’s first investment in German road public-private partnerships (PPP). Hochtief already operates a 45-kilometre stretch of Germany’s A4 between the Hessian-Turingian state border and Gotha, while Strabag is upgrading and operating a 60-kilometre stretch of the A5 in Baden-Wurttemberg.