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Investing in people’s journeys – from toll roads in North America to airports in Europe

10/09/2019

Ferrovial is one of the world’s leading infrastructure operators with a collection of high quality, long life assets which command high barriers to entry. The critical nature of the underlying assets epitomises the attractions of infrastructure as an asset class. 

The company is based in Spain, but the biggest contributor to group cashflow is the ETR 407 toll road in Toronto. The highway serving Canada’s largest city not only alleviates traffic congestion but is also arguably the best infrastructure asset in the world for investors. The asset benefits from unregulated pricing and a 100-year concession life of which more than 80 years remain, the combination of which leads to a long-term stream of cashflows with inflation-beating characteristics. The highway network has benefited from and expanded with Toronto’s urban growth and employs an efficient toll system which ensures automated billing without requiring the driver to stop at tollbooths and disrupt the free flow of traffic. Ferrovial also manages highway concessions in the US and Europe (primarily Spain and Portugal) and has been an innovator in the industry, introducing new concepts such as managed lanes on the LBJ highway in Dallas which provide dynamic pricing determined by levels of traffic with the goal of ensuring faster journey times (for a price).

Ferrovial also operates four UK airports (London Heathrow, Glasgow, Southampton and Aberdeen) as well as Denver International Airport in the US. The airports business is a beneficiary of structural growth trends from rising Asian and emerging market passenger volumes. Listed airport companies remain on a significant discount to the high multiples paid in the private market by pension funds for single assets.


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