Puerto Rico close to naming toll road advisors

An advisor for a package of toll road deals is set to be named in the next few days, followed by advisors for airport and energy deals. The selections come as Puerto Rico has concluded setting-up its PPP programme with the help of Macquarie Capital, which is also a potential advisor on the toll roads.

Puerto Rico is close to naming a sell-side advisor for its Toll Roads Project, a package of deals that could spur hundreds of millions of dollars of investment in the US territory’s highway sector.

In mid-February, Puerto Rico narrowed its search down to three teams – Macquarie Capital, a team from Bank of America Merrill Lynch with consultancy Deloitte, and accounting firm Ernst & Young – from 13 respondents to a request for proposals for sell-side advisory services for the project.

We want advisors who know how bidders think

David Alvarez


David Alvarez, the executive director of the Puerto Rico Public-Private Partnerships (PPP) Authority said in an interview the authority would aim to make its final selection by this week.

“We want advisors who know how bidders think,” Alvarez said, adding “we are very close to making the final decision”.

Puerto Rico is looking to expand three toll roads – PR-22, 52, and 66. Each has an operating stretch of road but is also in need of an expansion. So the authority is looking to do what is called a mixed brownfield and greenfield project, where an investor is given a lease over an existing, or brownfield asset, and commits to finance a new, or greenfield, portion of the same asset.

PR-22 mixed brownfield-greenfield project.
Source: Puerto Rico Public-Private Partnerships Authority


The combination of existing and new development across the three roads could lead to some sizeable transport projects for Puerto Rico. For instance, the cost of the greenfield portion on the PR 66 alone could cost $223 million, according to a presentation on the project posted on the authority’s website.

PR-52 mixed brownfield-greenfield project.
Source: Puerto Rico Public-Private Partnerships Authority


The toll roads would be the first to be developed under Puerto Rico’s new PPP programme, which was established in June 2009 to improve the Caribbean  island’s infrastructure, promote economic development and create jobs.

PR-66 mixed brownfield-greenfield project
Source: Puerto Rico Public-Private Partnerships Authority

The authority hired Macquarie Capital as an advisor to help set up “the general framework of the entire programme”, Alvares said. Macquarie's three-month engagement ended in December 2009 and the authority is now implementing PPPs.

The authority is also moving ahead with its plan to privatise Puerto Rico’s Luis Munoz Marin International Airport. In December, the Federal Aviation Administration accepted the airport’s application for the agency’s pilot privatisation programme, which would allow Puerto Rico to pursue a lease of up to 75 years for Luis Munoz with a private concessionaire.

Three teams – Bank of America Merrill Lynch and ING, Citi, and Credit Suisse – have been shortlisted as sell-side advisors for the airport, Alvarez said.

The authority has also begun the process of identifying sell-side advisors for its projects in the energy sector. Puerto Rico is hoping to convert 40 percent of its peak electricity demand, the peak being about 3,600 megawatts per year, into natural gas generation. “We are looking for a project that would allow us just to connect plants to a natural gas supply,” he said, beginning with two plants in the Southern city of Salinas.

Responses to a request for proposals for sell-side advisory services were due 1 March and are now being evaluated, Alvarez said.

In the ports sector, Alvarez said the authority is still working with ports officials to identify projects before it begins to search for a sell-side advisor.