Thursday, October 6

Spanish construction companies go shopping abroad

The Spanish construction company FCC has started the year 2022 landing in a new market, Georgia, through the acquisition of a water management company (GGU) for 158.7 million euros. An operation that perfectly exemplifies the strategy of the large groups in the sector in Spain, which in recent years have thrown their checkbook to land in new markets by buying from a local company and thus facilitating their growth in countries where they do not have previous experience or where they will open the doors of new contracts a country company.

In fact, the company controlled by Mexican magnate Carlos Slim also started last 2021 by acquiring two companies in Saudi Arabia, a market in which it landed almost a decade ago, but where it sought to strengthen itself. The transaction was also carried out by its water subsidiary, Aqualia, in which it participates together with the Australian fund IFM (well known in Spain after its controversial takeover bid for Naturgy), which controls 49%. A year before, prior to the arrival of the coronavirus, FCC’s water division landed in France with the acquisition of Services Publics et Industries Environnement (SPIE) after having analyzed previous opportunities in that country some time ago, such as the purchase of the Saur gala, which ended up in the hands of the Swedish fund EQT.

Also a few weeks ago, Ferrovial closed the acquisition of 24.86% of the toll road operator IRB Infrastructure Developers for 369 million. Through this operation, its toll road subsidiary (Cintra) landed in India. In any case, the construction company controlled by Rafael del Pino and Ignacio Madridejos has a different strategy than FCC and does not focus so much on buying companies, but on acquiring concessions or increasing its weight in them in order to obtain good dividends with these transactions .

For example, last year it was reinforced in two of its most important highways in the United States: I-66 in Virginia, where it bought a 5.7% package for 159 million, rising to 55.704%; and on I-77 in North Carolina, it increased its stake from 50.1 to 65.1% of assets. Ferrovial also studied increasing its stake in its largest asset in Canada, the 407 ETR highway, but after a legal dispute with its partner on this highway (the Canadian CPPIB fund) it ruled out taking control in the midst of the coronavirus pandemic.

Ferrovial, unlike FCC, focuses more on increasing its participation in different concessions to obtain important dividends after

Acciona has also been other large Spanish companies in making acquisitions to grow in other markets, especially the Australian one. In September 2020 closed the purchase of LendLease Engineering for almost 100 million, becoming one of the benchmark companies in the field of infrastructure in Australia, where it operates since 2002. In 2017 it also acquired another well-known engineering company in the country, Geotech, for which it disbursed around 140 million euros.

Concessions and water

At the beginning of 2020, it bought the largest concession in Brazil, the Orange Line of the Sao Paulo Metro, in which it later sold a part to enter the Stoa fund with the aim of providing financing to continue developing this project, valued at 2,300 million. These alliances with financial investors are very frequent in concessions, as the funds help defray the millionaire costs of this type of project.

Also in the field of concessions, Sacyr has recently closed an acquisition outside our borders. Has taken the 50% that it did not control in a desalination plant in Perth (Australia), which he launched together with Técnicas Reunidas years ago. In the water business, in addition, last December signed the take control of two desalination plants in Algeria in which it already participated in the capital together with Abengoa, from whom it buys its participation. The company chaired by Manuel Manrique has also acquired other concessions in Chile, one of its strategic markets.

The most anticipated operations in the market are those planned for ACS after the millionaire capital gains from the sale of its industrial business to Vinci. Renewables and concessions, your priorities.

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OHL, for its part, has been one of the least active construction companies in terms of acquisitions. At the end of 2020, Grupo Villar Mir bought 100% of the concrete manufacturer Pacadar, which has factories in Spain, the United Kingdom and Panama. In any case, the most anticipated corporate movements in the market, as indicated by financial sources to ‘El Periódico de España’, are those that ACS will undertake after the sale of its industrial business to the French group Vinci for 4,902 million euros. This transaction will generate capital gains of 2,900 million.

It should be remembered that the construction company controlled by Florentino Pérez already tried to carry out an important operation a few months ago that did not come to fruition, the purchase of Autostrade, the largest Italian concessionaire, which ended up in the hands of the consortium formed by the public entity Cassa Depositi e Prestiti (CDP) together with the Macquarie and Blackstone funds. In the midst of the pandemic, however, it closed the acquisition of the Elizabeth River Crossing tunnels with Abertis, which led to the landing of this company – in which it has participated together with the Italian concessionaire Atlantia since 2018 – in the United States. The same sources indicate that ACS’s objective is now especially focused on growing in renewable assets and concessions (the latter, preferably, in North America and Australia).

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