Transurban acquires $650m Montreal toll road from Macquarie

Purchase sees Transurban move into second market in North America.

Transurban Group has agreed to buy the A25 toll road and bridge in Montréal, Canada from Macquarie Infrastructure Partners for C$840 million ($651 million, €527.8 million).

The road operator and developer will acquire a 100 percent equity stake in the A25, which consists of a 1.2 kilometre bridge crossing the Rivière des Prairies and a total of 6 kilometres of four-lane toll roads on either side of the bridge.

Transurban will pay C$840 million plus C$18 million in transaction costs, with financial close targeted for the end of 2018, dependent on Investment Canada Act approval. It will retain C$377 million of existing asset-level debt post-acquisition with a remaining tenor of five years.

The A25 opened to traffic in May 2011 and Transurban will take over a concession from Québec’s transport ministry, running until September 2042.

Income will come from availability payments, guaranteed minimum payment and tolls. Average annual daily traffic across the bridge was 46,535 in 2017, a rise of 4 percent on the previous full year.

The availability payment is paid monthly, prorated to C$13.4 million per year and adjusted for any non-performance, while maximum toll rates increase annually in line with the Canadian Consumer Price Index and incrementally as traffic volumes exceed peak and off-peak thresholds.

In a statement, Transurban chief executive Scott Charlton said: “Montreal is an attractive second market for Transurban in North America as a developed economy with a growing population and a government that embraces innovative transportation solutions to tackle the region’s congestion problems.”

Transurban owns two sets of express lanes in North America, both in Virginia, US, close to Washington, DC. In Australia, it is the sole owner of the Lane Cove Tunnel, Cross City Tunnel and Hills M2 motorway in Sydney, as well as the CityLink road in Melbourne. It also owns stakes in Sydney’s Eastern Distributor and numerous roads in Brisbane.

Transurban did not respond to requests for additional comment by the time of publication. Macquarie Infrastructure Partners declined to comment.