Actis, a leading private equity investor in emerging markets, has sold its 26.9% stake in the South African toll road concession company, Trans African Concessions (TRAC), to a group of the existing shareholders. TRAC is a Public Private Partnership (PPP) responsible for the R3bn concession for the N4 Toll Route between Pretoria, South Africa and Maputo, Mozambique – South Africa’s first ever private toll road concession.
The acquisition consortium was led by the African Infrastructure Investment Fund (AIIF), managed by African Infrastructure Investment Managers (AIM), and was composed of existing co-shareholders that exercised their pre-emption rights. The acquisition was concluded last week following the successful completion of a R2.9 billion re-financing of the PPP earlier this year.
This groundbreaking PPP re-financing, underwritten by Investec Bank and Standard Bank, was the first of its kind in Africa and one of the largest transport deals in Africa to date. Not only has the re-financing reduced the financial risk for the business, it will also allow the business to begin expansion work earlier than anticipated, allowing the business to continually improve the service it provides to road users.
Actis had been involved with TRAC and the N4 Toll Route since its inception
Actis investment principal, Remy Hassenforder, ex-Chairman of the Board of TRAC, commented: "Actis has been involved in the TRAC project from the initial, high risk development phase through to the completion of the N4 extension project and the recent re-financing, demonstrating its commitment to the long-term growth of the business."
Richard Jackson, Actis investment principal, added: “The disposal is in line with Actis’s strategy to invest over the medium-term in strong local businesses with experienced management teams and then to sell to local institutions and infrastructure funds that are better placed to support the continued development of the business.”
Andrew Johnstone, Chairman of the Board of TRAC and Chief executive officer of African Infrastructure Investment Managers, commented: “The exit by Actis provided an opportunity for local investors to increase their interest in TRAC for the longer-term, and the interest shown by shareholders in enlarging their equity exposure indicates the increasing level of development and sophistication of South African Investors. The large contribution of the original foreign investors and Actis, in particular, in the development of the infrastructure market was appreciated and indicated their confidence in the country.”
Arthur Coy, Chief executive officer, TRAC, said: “Actis has been a tremendously supportive investor over the past seven years by helping us to create value in our business. They have advised us on the development of our strategy, supported our initiatives to continuously improve operations and, perhaps most importantly, Actis with other key shareholders, worked closely alongside us when we were bidding for the N4 extension and during the re-financing process.”
Nazir Alli, Chief executive officer, the South African National Road Agency Ltd, added: “TRAC represents a very successful partnership with the private sector and the initial investors contributed much to this. Recent developments including the refinancing have been beneficial to all parties, including the road user, who will now see improvements to the road ahead of previously anticipated schedule.” Since TRAC took control of the N4 Toll Route, it has been responsible for significant development of communities situated along the route by creating casual, temporary and permanent job opportunities. TRAC has supported local businesses during the construction and rehabilitation of the Route both in South Africa and Mozambique and continues to do so. In total, around 13,000 jobs have been created by the project.
TRAC was also responsible for the development of three training centres along the route. These training centres were part of the company’s integrated community participation programme where over 20,000 members of the local communities were trained on various programmes, including literacy and HIV awareness.
TRAC has been successful in meeting all the concession contract requirements in terms of its social, environment and health and safety policies. It was also instrumental in the development of the Traffic Incident Data System (TIDS). As a result safety on the road has improved significantly in the last five years and the N4 Toll Route is now one of the safest roads in the country. The TIDS system has now been adopted by other concessionaires on toll routes in Europe.