Monday, August 06, 2007

Goldman Sachs and ICA win bid to run toll roads in Mexico

Goldman Sachs fund wins US$4.1B bid to run 4 Mexican toll roads

August 06, 2007

Chris Aspin,
Copyright 2007

MEXICO CITY -- Mexico's ICA, the country's largest construction company, and a fund of Goldman Sachs Group Inc. won the right to run four existing toll roads with a US$4.1-billion offer, the government said Monday.

It is the first package of roads among those that the government of President Felipe Calderon plans to auction off in coming months and years, with plans to use the cash to build more highways to beef up of the country's poor infrastructure.

ICA and Goldman Sachs Infrastructure Partners I beat out five other bids for the 30-year concession to operate the more than 500 km of highways in central Mexico, the Transport Ministry said.

"The consortium formed by ICA and Goldman Sachs is the winner of the auction, given it offered most money to the government," the ministry said.

ICA's shares, which had been trading lower, rebounded on the news. Goldman Sachs shares ended 4.5% higher at $187.79.

The concession also calls for the construction of connecting roads between the highways, which link the cities of Guadalajara, Aguascalientes and Leon, and upgrades on various stretches of the toll roads.

Transport Minister Luis Tellez said 40% of the funds would go to paying down the debt of other government-held highways, just under 40 percent will be used to finish a public works highway between Durango and Mazatlan in northern Mexico, with the rest spent on other road projects.

Mr. Tellez said the government planned to auction off another group of highways toward the end of this year, given the investor appetite for these "long-term, high quality assets."

"It would be a smaller package than we are auctioning off today," Mr. Tellez told a news conference to announce the winner, adding his ministry was still working out the details.

Losing bids included ones made by IDEAL, a Mexican construction company owned by billionaire tycoon Carlos Slim; Spanish toll road firm Abertis; a consortium of Spain's FCC and private savings bank Caja Madrid; and Spanish building firm Obrascon Huarte Lain.

The toll roads that ICA and Goldman Sachs will take over, after making the payment to the government in October, had revenue from quotas last year of about US$185-million, according to Deputy Infrastructure Minister Oscar de Buen.

Mr. Calderon last month announced an ambitious US$37-billion transportation face-lift that includes the construction of three new airports serving beach resorts and building thousands of miles of new roads.

ICA shares closed up 0.5 percent at 71 pesos, after at one stage during the session being down more than 1%. Its New York-traded shares rose 1.6% to $78.01.

© 2007 Reuters:

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