Atlantia to Boost Infrastructure Acquisitions Outside Italy

  • Highway, airport operator plans 24% revenue growth by 2020
  • CEO doesn’t rule out raising stake in Venice airport company

Castellucci: Growth Abroad Is Acceleration, Not a Shift

Atlantia SpA, the infrastructure company controlled by the Benetton family, plans to boost its earnings abroad by acquiring airport and highway assets outside Italy as part of Chief Executive Officer Giovanni Castellucci’s strategy to reduce the company’s dependence on its home market.

Atlantia, which owns Italy’s biggest toll-road company and Rome’s airports, is seeking to boost the proportion of earnings before interest, taxes, amortization and depreciation coming from abroad to 50 percent in 2020 from a current 25 percent, the Rome-based company said Thursday in a statement. As part of the new strategy, Atlantia will restructure its business into four main units, separate its highway assets in Italy from those abroad and target projects in countries with the best prospects for gross domestic product growth.

The company plans to buy “more global GDP-driven assets outside of Italy in order to be more diversified and have lower cost of capital,” Castellucci said in a Bloomberg Television interview. “We are still interested in the region of developed countries, including Europe, which is becoming a very compelling area to invest.”

Leaders of the European Union’s Mediterranean countries have been calling in recent months for more government spending across the bloc, including on infrastructure, to bolster weak economic growth. Other potential opportunities emerging beyond Europe include the Brazilian state of Sao Paulo, which has scheduled presentations in November for four road concessions set to be awarded in 2017.

As it seeks to diversify its portfolio, Atlantia plans to sell a minority stake in its Italian toll-road division Autostrade per l’Italia SpA. The unit is being valued at about 15 billion euros ($16.5 billion) in initial talks with potential buyers, people familiar with the matter have said. Castellucci said in the interview that analysts estimate the division’s value at about 15 billion euros and that “this is the right time to sell a minority stake.”

Atlantia rose as much as 0.7 percent to 22.76 euros and was trading up 0.3 percent at 12:39 p.m. in Milan. That pared the stock’s decline this year to 7.5 percent, valuing the infrastructure operator at 18.7 billion euros.

The company wants to boost revenue 24 percent to 6.8 billion euros in 2020 from a predicted 5.5 billion euros this year. It’s targeting average annual Ebitda growth of about 7 percent, with dividends increasing 10 percent a year from 2016 to 2020.

Atlantia leads a partnership that agreed in June to buy 60 percent of France’s third-biggest airport, Nice-Cote d’Azur, for 1.2 billion euros. The company also signed a deal last month to acquire 21 percent of SAVE SpA, which runs the airport serving Venice, Italy.

Castellucci said SAVE is “well managed,” and he responded “if and when, why not?” when asked whether Atlantia would consider increasing its holding to a controlling stake.

Gathering Interest

Atlantia’s advisers are gathering initial interest from potential buyers of a holding in Autostrade, said the people, who asked not be named because the discussions are private. Infrastructure businesses are luring long-term investors, and the demand may drive the business’s valuation even higher, the people said.

PSP Investments, Allianz SE, the Kuwait Investment Authority’s Wren House Infrastructure Management unit, Caisse de Depot & Placement du Quebec, Gingko Tree Investment and Macquarie Group are among suitors considering bidding for the asset, said one of the people. Representatives of PSP, Allianz, Macquarie and Gingko declined to comment, while spokesmen for KIA and Caisse de Depot & Placement haven’t responded to requests for comment.

Castellucci said the upcoming Italian constitutional referendum isn’t playing a role in Atlantia’s plan to expand outside the country.

“There is too much emphasis on the Italian referendum on international markets,” Castellucci said. “Probably because there was not enough attention on the Brexit issue before the vote” by U.K. citizens in June, “there is an overreaction.” Even so, the Italian ballot won’t be as important to business as investors abroad are expecting, he said.

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