Monday, October 23, 2006

Australian tollway operator Transurban 'short-listed' for projects in Texas

Transurban to invest in US toll roads

October 23, 2006

The Age (Australia)
Copyright 2006

Tollway operator Transurban Group will set up an unlisted company in the United States to facilitate further investment in lucrative US toll roads.

Transurban on Monday said the new vehicle would likely be jointly owned by Transurban and institutional investors keen to tap into the toll road market.

Transurban chairman Laurie Cox said Transurban had appointed a North American advisory board to help it expand in the US.

"The US is a really exciting place for us to expand our activities, and the returns available from toll road investment opportunities in the US are more attractive than they are here in Australia," Mr Cox told reporters.

"The reason we are restructuring the business is to create a more efficient means of holding these offshore assets and at the same time enabling us to continue to make cash distributions to our Australian unit holders.

"It also separately gives us the ability to raise foreign capital."

Transurban, which owns and operates the CityLink tollway in Melbourne and the M2 Hills Motorway toll road in Sydney, already has interests in three US toll road projects.

In June this year, Transurban acquired a 99-year concession on the Pocahontas Parkway in the US state of Virginia for a total cost of $US611 million ($A815 million).

Transurban is also negotiating two HOT (High Occupancy Toll) lane projects in Virginia, between Richmond and Washington DC.

HOT lanes are usually set aside for vehicles with three passengers. Cars with single or dual occupancy can use these lanes by paying a toll.

Transurban managing director Kim Edwards said there was "a pipeline of other opportunities" in the US.

He said the new US vehicle, which is yet to be finalised, would be unlisted and partially owned by Transurban shareholders via Transurban International Ltd.

"We'll be seeking co-investors to invest alongside of us into that vehicle... we'll be looking for similar types of shareholders to us that are interested in extracting value from these assets over the long term," Mr Edwards said.

"So it's most likely to be pension/superannuation funds."

It was expected that Transurban would retain about 25 to 35 per cent of the new vehicle over time but in the short term Transurban might hold more than that.

Initially, the US vehicle would be seeking equity commitments of around $A2 billion.

Mr. Edwards said there had been enormous interest from potential seed investors around the world.

"Our aim is to have that settled by the first quarter of next year," he said.

Currently, Transurban's US business - the Pocahontas Parkway - represents only four per cent of Transurban's total assets.

If the HOT lanes are finalised, US interests will comprise 15-20 per cent of total assets.

But Mr Edwards said opportunities to grow assets in the US were far, far more substantial than in Australia.

He said Transurban had already been short-listed for some projects in Texas and there were a number of other opportunities that were presently confidential.

Transurban securities were steady at $7.35.

© 2006 AAP: