The Abertis play

This week’s unveiling of a possible buyout of Abertis brings to mind football and chess, writes Bruno Alves.

There are aspects of the recently unveiled planned buyout of Spanish developer Abertis by existing shareholders ACS and La Caixa and ‘outsider’ CVC Capital Partners which, given that ACS president Florentino Pérez is also the president of Spanish football giant Real Madrid, beg comparison to the beautiful game.

A leak to the press, followed by a sharp increase in Abertis’ share price ending in a brief suspension in the trading of its stock – the compelling ebb and flow was reminiscent of a great football match. And yet the tactics behind the deal bring to mind a more cerebral game: chess.

Regardless of the success or otherwise of his current gambit, Pérez is likely to be remembered as one of the key players in the chess game if only because he was the first to announce, back in April, that his firm and La Caixa – which together own the majority of Abertis – were on the lookout for a new shareholder to join Abertis’ capital base.

What could have passed as an off-the-cuff remark became more substantial earlier this week. Officially, ACS and La Caixa have only confirmed to the Spanish regulator that they are holding talks with European private equity firm CVC on bringing the latter into Abertis’ capital, which could include a buyout of the Spanish developer.

Unofficially, speculation is rife that the three firms will launch a tender offer to Abertis’ minority shareholders valuing the company at some €12 billion in equity, a premium to Abertis’ pre-announcement market capitalisation of €8.6 billion.

To pay for that, CVC would contribute the majority of an estimated €4 billion in equity with €8 billion in debt coming from a bank syndicate of between 14 to 20 banks. The latter is being put together by Italian bank Mediobanca – the same bank that advised on the sale of another Spanish developer, Itinere, to Citi Infrastructure Investors last summer.

Unsurprisingly, it’s the debt component of the deal that is the “key to the operation”, as one source put it, and also the “big doubt”, given that investors have of late been concerned about the health of the Spanish market.

Should the deal surmount this not inconsiderable challenge, a source hinted to Infrastructure Investor that a restructured shareholding tree could see La Caixa – currently Abertis’ largest shareholder with 29 percent of the stock – retain its place at the top. It would be followed by CVC as the firm’s second-largest shareholder while ACS could divest the majority of its 26 percent stake, possibly retaining a 5 percent to 10 percent holding in Abertis.

The source added that the scenario is very fluid at this point. Post-buyout, there is, however, a general speculative consensus that Abertis will downsize to its toll road operating roots, divesting stakes in fellow road operators Brisa and Atlantia and French telecommunication group Eutelsat for some €3 billion.

Regardless of the final structure, it’s possible to view the deal as a win-win scenario for all parties involved.

For Pérez – whose total stake is worth some €2.96 billion post-tax, according to a research note from Exane BNP Paribas – the buyout would provide the financial firepower he has been seeking to increase his 12 percent stake in Spanish utility Iberdrola, Spain’s leading energy firm, to 20 percent.

La Caixa would not only be able to generate a considerable surplus from Abertis’ share price, but could actually walk away with a bigger stake in the developer, as it informed the Spanish regulator in a recent filling.

Finally, CVC Capital Partners, which has been raising an infrastructure fund with a target of €2 billion since 2008, could muscle into the infrastructure space through a mega-sized investment in a blue-chip asset. Whatever the eventual success of the investment, no one could argue against this being a spectacular introduction to the game.