UBS: MIG consortium preferred bidders for APRR

UK Takeover Panel Disclosure

Macquarie Bank is considering a bid for the London Stock Exchange. As adviser to Euronext, a possible bidder, the UK Takeover Panel requires UBS to disclose that it is acting for Euronext on all research on Macquarie Bank and its listed and unlisted funds

What we like about proposed acquisition of APRR

(1) Mature toll road providing minimal traffic and operational risks; (2) Appears to be valuation and cash flow accretive; (3) Highlights MIG’s ability to identify, secure and win toll road deals; (4) Strategic entry into French tollroad market.

What we don't like about proposed acquisition of APRR

(1) Limited information released about the acquisition; (2) A relatively small acquisition (~6% of NAV) that increases the complexity of the portfolio; (3) As a mature toll road there will be limited re-rating (unlike the de-risking of a greenfield toll road); (4) The transaction has been competitively bid; (5) Limited disclosure regarding fees payable to MBL.

Valuation: $4.30 (DCF) / Price Target $4.55 (DCF)

MIG remains one of our preferred infrastructure exposures. Our PT reflects our DCF-based valuation of $4.30, and adds $0.10/share for the Dulles Greenway deal and $0.15 for the probability of another. We expect dealflow to continue and remain positive re: MIG's ability to identify, secure, acquire & optimise toll roads.