International consortia vie for Goldman’s Mexican highway portfolio 

08 October 2019 - 12:00 am UTC

Two teams are in the second round to acquire Goldman Sachs Infrastructure Partners’ (GSIP) 11-road Mexican highway platform Red de Carreteras de Occidente (RCO), said four sources familiar with the sitiuation.


China Communications Construction Company (CCCC) is competing with a consortium led by Italy’s Atlantia and Spain’s Abertis, added those sources.


The Atlantia/Abertis consortium also includes financial sponsors Abu Dhabi Investment Authority (ADIA), Caisse de dépôt et placement du Québec (CDPQ) and GIC (formerly the Government of Singapore Investment Corporation), according to two of the sources.


GSIP I owns 51.3% of RCO, while GSIP II bought an additional 18.7% stake from Mexican developer Empresas ICA in August 2013 for USD 401m. The remaining 30% is held by Mexican pension funds (AFORES) through one of the country’s first ever CKD funds.


Goldman Sachs and Santander are advising GSIP. Morgan Stanley is advising the Atlantia/Abertis consortium, according to the same two sources.


The price the bidders are willing to pay for the highway portfolio could be as high as MXN 60bn (USD 3.1bn), according to two of the sources, although a third source briefed said that bids might be lower due to political uncertainty.


The company registered an EBITDA of MXN 6.14bn for the twelve months prior to 30 June 2019, according to RCO’s quarterly reports. 


RCO has net outstanding, long-term debt obligations of MXN 47.96bn in a mix of bank and capital market tranches, according to RCO’s 2Q19 financial report.


One other issue that bidders may have to take into account is the Mexican government’s attempts to negotiate new investments in additional works in existing road concessions through a process of ‘desdoblamiento.’


Head of the Secretariat of Communications and Transport (SCT) Javier Jiménez Espriú and the head of the Mexican Treasury Arturo Herrera Gutiérrez announced that they would seek to negotiate additional works such as lengthening or widening highway concessions in return for extensions to the concessions’ terms, they said in a joint press conference of 30 July.


The negotiations regarding the desdoblamientos are ongoing and of the seven projects worth MXN 20bn proposed by the SCT, three are highways that form part of the RCO platform – Carretera Ecuandureo-La Piedad, the Lagos de Moreno bypass and Zitácuaro-Maravatío.


Since October 2016, ADIA has owned a 20% stake in Chilean highway platform VíasChile, alongside Abertis (80%).


GIC owns an 8.14% stake in Atlantia.


CDPQ was bidding with Atlantia in the prior sale process that financial advisors Goldman Sachs and Santander had run for RCO in 2016 before GSIP cancelled that attempt.


In October 2018, Atlantia and Spain’s Grupo ACS acquired 100% of Abertis for EUR 16.5bn (USD 18.81bn).


Morgan Stanley and GSIP declined comment on the situation. Abertis, Atlantia and CCCC had not responded to requests for comment by press time.


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