Puerto Rico selects toll road, airport advisors

Macquarie Capital will serve as the sell-side advisor to the US territory on its package of toll road deals, while Credit Suisse will advise it on its long-term concession of Luis Munoz Marin International Airport.

Puerto Rico has selected sell-side advisors for its toll road and airport projects, according to a senior official at the US territory’s Public-Private Partnership Authority.

The job of advising Puerto Rico on its toll road projects went to Macquarie Capital, while the advisory role for Puerto Rico’s Luis Munoz Marin International Airport went to Credit Suisse, according to David Alvarez, the Authority’s executive director.

The toll road projects involve expanding three highways 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.

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.

Alvarez said Puerto Rico chose Macquarie based on the strength of its experience in the toll road sector. Managing director DJ Gribbin will lead the engagement, Alvarez said.

The airport project involves privatizing Puerto Rico’s Luis Munoz Marin International Airport. In December, the Federal Aviation Administration (FAA) 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 – were shortlisted as sell-side advisors for the project from 14 respondents to a request for proposals for sell-side advisory services.

Alvarez said Puerto Rico chose Credit Suisse based on its recent experience in advising on airport privatisations under the FAA’s pilot privatisation programme. The investment bank was the financial advisor to Chicago on its attempted lease of Midway Airport last year.

“That weighed on the positive side for Credit Suisse,” Alvarez said. Credit Suisse director Mark Morehouse will lead the engagement, he added.

Next, the authority will set about picking our legal advisors for the toll road and airport projects. Technical advisors are also being sought for the toll road projects, Alvarez said.

In addition, the Authority will press ahead with writing a so-called “value-for-money” analysis for both sets of projects. The analysis will compare the traditional method of procuring the projects with a public-private partnership approach. Once complete, the analyses will be presented to the board of the Authority for approval.

The goal is to begin qualifying bidders for both sets of projects in the next few months.

David Alvarez and DJ Gribbin will address the Puerto Rico project pipeline in greater detail at Infrastructure Investor: Southeast, June 3rd in Miami.  To learn more about the event, see the agenda and current speaker list, click here.