Pension funds battle over Spanish toll roads in €1.3bn tug of war

APG and Corsair Capital have claimed victory in their bid for Itínere, although Globalvia insists its accepted bid in July remains valid.

Four European pension funds and US group Corsair Capital have locked horns with their respective bids for Spanish toll-road company Itínere, which is valued at €1.3 billion.

Globalvia, the Spain-based global toll-road investor owned by Canada’s OPTrust, the UK’s USS and the Netherlands’ PGGM, believed it was set to buy 55.6 percent of Itínere at the end of July after having an offer accepted by minority shareholders Abanca (23.8 percent), Sacyr (15.5 percent) and Kutxa (16.3 percent), providing the company with an equity value of €1.3 billion.

However, last week PGGM’s compatriot APG announced, alongside US private equity group Corsair Capital, that they had used pre-emption rights to buy 59.2 percent of Itínere at the same value. This share capital consists of Corsair’s existing 38 percent ownership through the Gateway Infrastructure Investments fund it has managed since 2015, Sacyr’s 15.5 percent and Liberbank’s 5.8 percent.

Gateway Infrastructure Investments, a $3.4 billion fund launched by Citi in 2008, originally invested in 51.1 percent of Itínere in 2009 in a deal valuing the company at nearly €2.9 billion. The fund, which APG is an LP in on behalf of ABP, was generating a net IRR of -2.3 percent as at the end of Q1 2018, according to the New Mexico Educational Retirement Board.

The joint bid by APG and Corsair though has come under fire from Globalvia, which believes the offer does not constitute an exercising of pre-emption rights and reiterated its desire to invest in Itínere.

“We don’t think the APG/Corsair intention to purchase the minority stakes [of Sacyr and Liberbank] is comparable to our offer, so they are not executing the same pre-emption rights,” a spokeswoman for Globalvia told Infrastructure Investor. “They don’t want to buy the three minority stakes [we do]. The offer should be comparable in price, terms and conditions and it is not.

“We have a contract with the three minority shareholders to buy their stakes in Itínere. Our intention is to go ahead with the contract we have signed.”

Toll-road penalty

The spokeswoman added that Globalvia’s original contract contained a clause that if either party broke the agreement, the party to do so would pay a penalty to the other side of €100 million.

“From our point of view, if Sacyr decides to follow the offer from Corsair and APG, then they would have to pay Globalvia €100 million,” she added, stating that the final decision will be taken by Sacyr.

Sacyr declined to comment on its position. In July, the Spanish construction group informed the Madrid Stock Exchange it had “reached an agreement today, together with Abanca and Kutxa, for the joint sale to Globalvia”. It did not make a similar statement following APG’s announcement last week.

APG also declined to comment on the matter. Its original statement said agreements have been signed and the duo expect to close the deal by the end of the year.

Itínere operates five toll-road concessions across 552 kilometers and has the longest road platform concession life in Spain of about 22 years.