IFM takes control of UK’s M6 with debt buy

The loss-making road, the only pay-to-use motorway in the UK, has been controlled by 27 banks since a deconsolidation from Macquarie in 2013.

Australian pension group IFM Investors has bought a controlling stake in the UK’s M6 toll road, bringing an end to a year-long sale process.

The investment manager has bought a majority stake in the debt of the UK’s only pay-to-use motorway. It declined to comment on the size of the stake and its value, although sources told Infrastructure Investor last year when the sale began it was likely to be worth between £1.4 billion ($1.8 billion; €1.6 billion) and £1.6 billion.

Those also said to be interested in the deal at the time included Spanish developer Abertis, InfraRed and a consortium of Globalvia and DIF.

The debt has been bought from a group of 27 banks including Crédit Agricole, Commerzbank and Banco Espirito Santo. The consortium took control of the asset in June 2013 following a debt restructuring deal with Macquarie, which sought to remove the asset’s risks from its balance sheet.

The deal earned Macquarie a A$1.8 billion ($1.4 billion; €1.2 billion) gain and while it retained its 100 percent equity interest in the project, its only receivables from the M6 since have been an annual management fee of about £750,000. Macquarie has no further commitments to the M6 toll and has received a £2.6 million final management fee.

Since opening in 2003, the 43km three-lane motorway has always been a loss-making scheme, with latest available figures indicating an £18.4 million loss for 2015, although this was trimmed from £28.6 million in 2014. Traffic numbers have long disappointed: the latest figures between January and March 2017 show 44,942 customers, far below the 72,000 initially envisaged for the project, although itself a 6.9 percent year-on-year increase.

IFM vowed to use its toll road experiences, including its $5.7 billion acquisition of another struggling toll road in Indiana in 2015, to improve the fortunes of the M6.

“M6toll complements our existing portfolio of toll road and other infrastructure investment,” said Christian Seymour, head of infrastructure for Europe at IFM. “We bring significant knowledge from being a hands-on owner of toll roads for over 15 years, in which time we’ve delivered substantial benefit and value to these individual assets and the communities they serve. Under our stewardship, we believe M6toll can provide stable and secure returns for our pension fund investors over many years.”