The four bidding groups for Queensland Motorways may borrow as much as $4.8 billion or 80 per cent of a potential $6bn purchase price for the 70 kilometres of tolled roads, bridges and other infrastructure in and around Brisbane, reporting by Data Room has discovered.
Such a high ratio of debt to equity is unusual in an infrastructure deal, and is seen only when the asset is considered highly desirable with stable revenues. Debt more commonly makes up 60 per cent to 70 per cent of a deal.
Those familiar with Queensland Motorways says its near monopoly over traffic flow in Brisbane means stable traffic volumes of about 300,000 motor vehicles per day and this combined with the network’s rising revenue have given Australian, Asian, US and European banks confidence to finance a deal.
Banking groups are being finalised by each of the four bidding parties who are likely to fund 20 per cent of any purchase of Queensland Motorways with their own equity.
Final bids are due April 22 in a sale process being managed by Macquarie and UBS on behalf of QIC, which holds Queensland Motorways on behalf of Queensland’s Defined Benefits Funds. Queensland Motorways is valued at between $5bn and $6bn.
In the 12 months to June 30, 2013, Queensland Motorways’ revenue was $328 million, up from $314m in 2012 and up 17 per cent over two years.
Toll road operator Transurban, superannuation fund AustralianSuper and a unit of Abu Dhabi’s sovereign wealth fund Tawreed Investments are one group bidding for Queensland Motorways. The group is being advised by Morgan Stanley and Goldman Sachs.
Melbourne-based investor and fund manager IFM, Canadian infrastructure investor Borealis and Singapore sovereign wealth fund GIC make up a second bidding group, advised by Rothschild.
Melbourne-based infrastructure investor Hastings, Spanish infrastructure operator and investor Abertis, the Kuwait Investment Authority and Dutch pension fund APG are a third group that is being advised by JPMorgan and RBC.
A group of Malaysian investors consisting of UEM, the country’s sovereign wealth fund Khazanah and the nation’s Provident Employees Fund are being advised by CIMB and Deutsche Bank.
(Reporting by Brett.Cole@businessspectator.com.au
Editing by Victoria.Thieberger@businessspectator.com.au )