Goldman Sachs cancels RCO highway sale in Mexico

16 March 2017 - 12:00 am UTC

Goldman Sachs Infrastructure Partners (GSIP) has cancelled the sale of its 70% stake in the Red de Carreteras de Occident (RCO) highway concessionaire, two sources close to the deal said.

The first source told InfraLatinAmerica that although the two Goldman Sachs funds that own the toll road had been considering a sale since the summer, recent strong performance figures registered by the asset encouraged the firm to cancel the sale and retain its participation.

The group recorded a 14.29% increase in toll revenue to MXN 1.93bn compared with 4Q15, and a 17.34% rise in adjusted EBITDA to MXN 1.72bn, according to its latest published results in the fourth quarter of last year.

Previously, InfraLatinAmerica reported that Italy’s Atlantia and Spain’s Abertis were both considering bids for the highway concessionaire but Atlantia recently said the asset “has high requirements in terms of return on capital” and as a result it was uncertain on whether it would bid. Abertis confirmed that it did not present an offer, according to a spokesperson.

Both groups have been seeking to boost their international presence in order to further diversify and increase their exposure to growth markets and Latin America.

RCO is owned by two Goldman Sachs funds, Goldman Sachs Infrastructure Partners I (GSIP I – 51.3%) and Goldman Sachs Infrastructure Partners II (GSIP II – 18.7%) and the RCOCB Trust Fund (31%). GSIP II acquired the additional 18.7% stake from Mexico’s Empresas ICA in 2013 for USD 393m.

RCO operates 558km of toll roads between Mexico City, Guadalajara and Aguascalientes. It was awarded the 30-year DBFMO for the so-called FARAC I Highway Package in 2007.

In April 2016, RCO was also awarded the DBFMO tender for the Tepic-San Blas highway under a 30-year concession.

Goldman Sachs has changed the name of its infrastructure fund series. The firm’s latest infrastructure fund is called West Street Global Infrastructure Partners III.