Investor Day April 2010 INVESTMENT STRATEGY. Mr. DAVID DIAZ Corporate Development Director

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Transcription:

Investor Day April 2010 INVESTMENT STRATEGY Mr. DAVID DIAZ Corporate Development Director

abertis: Investment strategy 1. An overview of the infrastructure market 2. abertis strategy 3. A robust methodology for successful investments 4. Value creation 5. Conclusion 2

Downside protection Landscape for infrastructure deals... Deal Pipeline Before Surge in number of projects Megadeals Now Confidence is rising but still unclear pipeline Medium sized deals Asset rotation and distressed sellers PPPs Technical and financial advantages of PPPs remain Deficits may encourage privatisations, although stimuli packages may have a short term impact in postponing some projects Investors Capital structure Valuations Very competitive landscape High liquidity and access to credit (debt and equity) Highly leveraged structures More aggressive operating assumptions Optimistic debt refinancing assumptions More selective and sophisticated investors (Operators, contractors and financial investors) More limited liquidity and improving access to credit Need to access all sources of capital Realistic assumptions 3

abertis: Investment strategy 1. An overview of the infrastructure market 2. abertis strategy 3. A robust methodology for successful investments 4. Value creation 5. Conclusion 4

abertis strategy A long-term investor with a selective, sustainable and defined growth strategy Rigorous investment policy focused on value creation Sector Focus Focus on transport and telecommunications infrastructures Stable, visible and predictable cash flow. Inflation linked Geographic Focus A selective geographic focus to expand our geographic footprint in higher growth economies Industrial approach Leading shareholder Optimum financing Industrial logic and active management involvement (transfer of know-how and share of best practices ) Strong commitment to all stakeholders abertis as the leader of a solid and prestigious consortium, with strong local partners Strong relationship with leading partners and advisors Specific optimum financing strategy for each operation (non recourse financing in local currency) 5

abertis strategy A long-term investor with a selective geographic focus Stability and strong economic growth Legal Framework and PPP support International expansion in political, economic and socially stable countries Need for infrastructure and strong forecasted economic growth Country Size and expected deal pipeline Clear and supportive regulatory framework An independent and strong justice system A strong political commitment to PPP by all parties Track record of private investment in infrastructure Tender Process A transparent, rigorous and no bureaucratic tender process abertis competitive position vs. local players Financing in local currency Developed financial markets (Role of Multilateral Development Banks to take risk) Availability of long term financing in local currency (CCS/NDF) 6

abertis strategy abertis, the industrial partner of choice in a Partnership approach Majority stake abertis as the main shareholder Majority stake Largest shareholder As large as the largest Control (or at least negative control) Long term investor: path to control if minority stake Sole industrial partner The Industrial partner Backing of local partners [and financial partners] Alignment of interest between the different parties 7

abertis strategy A selective and successful growth strategy since the foundation of abertis From 2 sectors and 5 countries to 5 sectors and 18 countries DCA 2004 2005 2006 2007 2008 2009 0.4 1.0 5.1 1.9 1.7 1.1 Investment as a percentage of Firm Value, on a pro-rata basis. In Billion euros Highlights: 1999 2004 2009 Workforce 1,970 5,668 12,484 x 6 Revenues 0.5 1.5 3.9 x 8 Assets 3.2 7.1 24.6 x 8 billion 8

Downside protection abertis strategy Pop: 499 m. GDP: 16.1 tr. + 1.5% Pop: 34 m. GDP: 1.4 tr. + [3.0%] Pop: 307 m. GDP: 14.4 tr. + [3.0%-2.5%] Pop: 111 m. GDP: 1.0 tr. + [4.0%-5.0%] Pop: 17 m. GDP: 0.16 tr. + [4.0%-6.0%] Source: CIA World Fact book Population: July 09 estimate GDP: in USD, 09 Estimate with Official Exchange Rates Pop: 198 m. GDP: 1.5 tr. + [6.0%-4.5%] Pop: 41 m. GDP: 0.3 tr. + [3.5%-3.0%] Pop: 77 m. GDP: 0.6 tr. + [5.0-3.5%] Pop: 1,157 m. GDP: 1.1 tr. + [8.5%-8.0%] Pop: 140 m. GDP: 1.2 tr. + [4.0-3.5%] Pop: 240 m. GDP: 0.5 tr. + [6.0%-6.5%] Pop: 1,340 m. GDP: 4.8 tr. + [10.0%-9.5%] Pop: 21 m. GDP: 0.9 tr. + [3.0-3.5%] Pop: 127 m. GDP: 5.1 tr. +2.0% 9

abertis strategy Km Travelled Growth to 2030 CAGR and infrastructure investment 200 NA 1,6% 1,5% 2,4% 1,0% 1,2% 0,9% 1,1% 2,0% 305 EU 2,5% 200 Asia (ex-china) 200 Ch 7,0% 55 RU/FSU 7,9% 1,1% 2,9% 4,2% 45 LA 2,2% Source: OECD and CIBC Infrastructure investment includes energy, water, telecom and transport WORLD: +2.9% Annual Infra Invest. USD b. 10

abertis strategy A key threshold of accelerating vehicle ownership occurs around USD 5,000 per capita GDP 900 800 United States 700 Italy Australia Cars per 1.000 people 600 500 400 300 200 100 Slovenia Czech Republic Poland Portugal Croatia Mexico Russia Brazil Chile Turkey Spain Germany France Canada United Kingdom Ireland 0 China India 0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 GDP per capita (USD) 11

Downside protection abertis strategy Acquiring a global footprint Monitoring opportunities in Europe (France, Turkey ) Geographic Focus US (prioritizing key States) Latin America (Brazil, Chile and Mexico) Asia (China and India, certain Provinces or States) With the objective of diversifying geographically Acquiring a global footprint Consolidating our leading position in countries such as France or Chile Entering into higher-growth economies 12

Downside protection abertis strategy Focus on opportunities that provide the best risk-adjusted returns Toll Roads Telecom infrastructure Focus on brownfields with real tolls and selective greenfields with limited construction risk (low amount and low complexity) Strong focus on Electronic Toll Collection tenders in Europe to become a leading player in this field (DSRC and satellite technologies): France, Poland, Hungary, Slovenia Very selective on terrestrial opportunities through abertis telecom Eutelsat and Hispasat as potential platforms for growth Airports Car Parks Logistics Short term focus on maximizing value of existing airports and expanding capacity (London Luton) Uncertain pipeline for inorganic growth Focus on consolidating recently acquired assets (successful expansion in Chile and Italy) Very selective on inorganic deals to reinforce leading position in the countries where saba is already present Short term focus on maximizing value and consolidating existing assets 13

abertis: Investment strategy 1. An overview of the infrastructure market 2. abertis strategy 3. A robust methodology for successful investments 4. Value creation 5. Conclusion 14

Downside protection 5 key phases in M&A A world-class M&A team (analysis and execution) Deal Origination & pre-deal Due Diligence Valuation Identifying targets that will benefit from our strengths and competitive advantages First mover advantage and lobbying to influence the tender Ability to take advantage of proprietary deals to avoid auctions Leveraging on our shareholders global presence to identify new opportunities High quality internal team with unparalleled understanding of infrastructure and M&A (>10 y. average tenure at abertis), supported by external advisors Understanding the culture and capabilities of abertis Site visit and management due diligence Business unit management to support Corporate M&A team Internal modelling, supported by independent Investment Bank model Orthodox methodology to M&A and a realistic and deliverable Business Plan Negotiation & Communic. Integration Track record in negotiating successful acquisitions Ability to get the whole organisation and Board of Directors support Anticipating and accelerating future integration to capture synergies Analysis of existing Management + expatriates 15

Downside protection The Internal Rate of Return A thorough and disciplined valuation analysis The Cash Flow A Realistic Business Plan to be delivered Thorough analysis of different assumptions SWOT analysis Cash Flow profile and robustness The Internal Rate of Return Valuation & Price IRR on Base Case (Shareholders IRR and Project IRR) but also focus on downside scenarios Bottom-up approach to determine hurdle rates Standard 10%-15% Shareholders IRR range (at abertis) Dividend Yield Sensitivity analysis is key Share Purchase Agreement. Representations & Warranties Value creation to shareholders as the main driver to avoid agency costs Financial impacts of the acquisition closely analysed (dividend policy, earnings per share, cash per share, debt ratios and rating, ) Implied Multiple as a reference 16

An example As an example: the traffic forecast analysis 1. ECONOMIC TRENDS 2. DEMOGRAPHIC TRENDS 3. ENERGY PRICES 4. GOVERNMENT POLICIES TRAFFIC FORECAST INFRASTRUCTURE UPGRADING AND EXPANSION 5. BEHAVIOURAL ISSUES 6. COMPETING ALTERNATIVES 17

An example As an example: Chilean assets acquisition ADT 2009 Revenues 2009 (mm euros) 25,000 20,000 22,200 21,660 60 50 50 52 15,000 10,000 5,000 4,500 4,579 40 30 20 10 28 29 0 Model Real Model Real 0 Model Real Model Real Rutas Elqui Rutas Elqui EBITDA 2009 (mm euros) 50 40 42 44 Shareholders IRR (nominal in euros) 30 20 10 23 23 Rutas 15,5% Elqui 13,0% 0 Model Real Model Real Rutas Elqui 18

abertis: Investment strategy 1. An overview of the infrastructure market 2. abertis strategy 3. A robust methodology for successful investments 4. Value creation 5. Conclusion 19

Downside protection Value Creation The objective is profitability and value creation, not size Revenue policies Opex & Capex optimisation Financing structure While more dependent on GDP and inflation, there is room to apply policies that create value for shareholders (discount policies, electronic toll collection.) Strong focus on quality Managing infrastructures during the last 40 years. Optimise resources by sharing best practices Capex at the right timing and cycle that minimizes future maintenance Strong expertise in project financing globally Due Diligence practices and industrial experience. Capacity to optimize debt quantum in front of our competitors. Privileged Relationship with banks Concession agreement Focused on dealing with public authorities to reach win-win agreements. A deep understanding of the concession agreement framework has led to value creation deals such as AP-7 or Paquet vert in France) 20

Downside protection A robust Cash Flow A robust and growing Free Cash Flow Generation 4.000 abertis' Cash Flow Grupo abertis A High quality EBITDA that underpins a selective and sustainable growth strategy 2.000 0 EBITDA 2010 2011 2012 2013 2014 2015 Cash Generation Dividends Paid Net Interest expenses, tax and others Expansion Capex Operational Capex 21

Downside protection A robust Cash Flow A robust and growing Free Cash Flow Generation 16.000 Net debt, millions ( ) Strong capacity to deleverage A solid rating and a low cost of debt 14.000 12.000 10.000 8.000 6.000 4.000 2.000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 22

abertis: Investment strategy 1. An overview of the infrastructure market 2. abertis strategy 3. A robust methodology for successful investments 4. Value creation 5. Conclusion 23

Downside protection Conclusion Key strengths in our growth strategy A successful track record in M&A A leading management team A robust and growing Free Cash Flow Generation A Rigorous investment policy focused on value creation A selective geographic focus to expand our geographic footprint in higher growth economies 24