Major road ahead

Abertis has transformed itself from a broad-based infrastructure group, largely focused on its Spanish home market, to a leading global group specialising in operating toll roads. Here Francisco Reynés, the group’s vice-chairman and CEO, gives a personal view of the challenges and opportunities that change of strategy is bringing.


The global growth drive

FOR ABERTIS INFRAESTRUCTURAS, the great recession that followed the financial crisis was the turning point in terms of the strategic direction of the business.

It brought with it a panoply of challenges including a restricted supply of credit to public administrations, atypical economic cycles and low inflation in our main markets.

We had to adapt to this new environment quickly and we did it by prioritising international growth and by focusing the business plan on the area where we had the greatest know-how – toll road management.

After a long reorganisation process, today Abertis is the world leader in this sector, measured by the number of kilometres we manage, with over 8,300km all over the world. Today, 70% of Abertis’s business is outside Spain, making us a truly global company with operations across Europe, North America and Central and South America.


Although the economic environment has improved since the depths of recession, clear challenges remain.

Public administrations are still suffering credit restrictions, but infrastructure requires ongoing maintenance and development if countries want to remain competitive and continue to grow.

And the levels of investment required are vast. For example, the American Society of Civil Engineers calculates that USD1.4tn is needed to fund transport infrastructure between now and 2025 in the U.S. alone.

We believe that meeting this investment challenge should continue to drive public–private collaboration in the sector.

It’s encouraging that many countries, such as France, Chile and Brazil, are preparing ambitious infrastructure programmes that will offer interesting opportunities in the short term to fund assets that will remain in place to serve society for generations to come.

Given this investment requirement it’s not surprising that the infrastructure sector is becoming increasingly attractive to investors. But it’s important to remember investing successfully in this sector also requires significant management know-how and a long-term vision.

In the case of the toll road sector, we often talk of contracts and concessions with a lifespan of over 25 years, preceded by significant initial investment. To succeed in this sector, management companies need the industrial strength and financial solvency to weather the different economic, political and social cycles in the countries where they invest.


We have clear priorities in terms of selecting which markets to invest in. We target those countries that offer a clear regulatory framework, legal certainty and favourable funding and yield conditions, and where we feel our investment in toll roads can add real value in terms of securing both economic and social progress.

Abertis now operates in 12 countries in Western Europe and America. These are economically developed countries but, in terms of infrastructure funding, they offer significant investment opportunities in existing networks – in other words, brownfield concessions. These are regions where we feel comfortable to operate.

Regions such as Asia and Africa have a greater need for new infrastructure or greenfield developments. These are less suited to the current Abertis business model. But, as a world leader in the toll road sector, we are obliged to analyse all of the opportunities offered by the infrastructure sector all over the world, provided they meet our legal and financial discipline conditions.

One of our priorities when deciding to invest in a country is legal certainty and a clear regulatory framework.

During the long lifespan of concessions it’s not unusual to see significant political, economic and social change. Managing that change requires two things in particular: that we remain flexible and adaptable as a company, and that public administrations maintain a stable legal framework in which we can operate.

I would love to see a broader move towards stable and more homogenous regulation offering clear guarantees with respect to public–private collaboration on infrastructure development.

There has been some significant progress on this front, but we believe that much still remains to be done.


The fact that toll roads are public assets managed by a private company is an added complexity.

All over the world, Abertis works with different authorising bodies, partners with different characteristics, different types of shareholder, as well as a variety of customers, suppliers and partners.

Getting this right can be tricky. But bringing together the different interests of the many stakeholders requires, above all, management based on trust, professionalism, a long-term vision and a clear desire to serve society.

It also calls for a high degree of agility on our part. And I think we are achieving this in three ways.

Firstly, through an open, global culture in which our international divisions have a high degree of freedom to act independently, so that they have the ability to be flexible and adaptable but always within the context of a group of companies that remain in constant communication and are closely aligned.

Secondly, by unifying and simplifying our processes we’ve been able to generate significant synergies for Abertis as a whole and for our individual business units.

Finally, we have also always opted for innovation. Our recently rebranded Emovis toll technologies division will, I believe, continue to give us tremendous competitive advantage in our chosen markets.


For anyone operating in this sector one issue remains a significant and worrying problem – road safety. This is a real priority for Abertis and it’s one area where I’d like to see significant progress.

I always begin my meetings with each of our business units by going over the accident rates on our networks. Our work with associations such as Together for Safer Roads is just one example of our commitment to addressing this global problem.

We have a clear goal in this respect. As part of our goal to bring both economic and social benefits in the markets we serve, we want to establish Abertis as the world leader in road safety knowledge and best practices.

Partners across the world

Our partnership with Abertis has evolved as the company has built on its Spanish roots to create an international toll roads business in an increasingly active but complex global infrastructure market. It’s a relationship based on trust and mutual understanding, says Pablo Mayor.

IN 15 YEARS OF WORKING CLOSELY WITH ABERTIS INFRAESTRUCTURAS, Pablo Mayor, a partner in our Madrid office, has seen the company transform itself from a strong and highly profitable Spanish infrastructure group to a global business pursuing interests across Europe, the Americas and Asia.

As the group has expanded internationally it has also increasingly focused its interests on operating toll road and motorway concessions, establishing itself as a global leader in the sector as well as a top company on Spain’s IBEX 35 index.

Through this time of change and growth, A&O’s relationship with Abertis has evolved significantly and grown stronger with every year that has passed.

Building the right capabilities to support Abertis has meant following the company’s changing strategy closely and adjusting our capabilities accordingly.


At first that meant supporting the business in its home market, doing important public law work and then gradually offering a broader range of corporate law services, including project financing, M&A support and tax advice.

Some ten years ago the group adjusted its strategy to focus on overseas markets, to the point where it now has just 30% of its interests in Spain, compared with 95% a decade ago.

“The strength of our network of international offices meant we were very well placed to be on their panel of preferred law firms, not least because we have built a very strong understanding of the business as it has developed,” says Pablo.

The internationalisation of the group coincided with another key shift in strategy: the decision to focus on becoming a leading operator of toll road concessions around the world.

To fine-tune that focus, Abertis set about spinning off some of its other infrastructure interests, including airports, parking concessions and, in 2015, its telecoms arm, Cellnex, which is one of Europe’s largest operators of telecom towers, a significant player in broadcasting services, and an IBEX 35 company in its own right, where Abertis still holds a major stake.

Again, because of A&O’s long links with these businesses, the relationship with them has continued now that they are operating as standalone companies.


Infrastructure, in general, is becoming an increasingly sought-after asset class as a wide range of investors, particularly institutions such as pension funds, ramp up their exposure to the sector.

Infrastructure is attractive to these big funds because it satisfies their investment criteria, to meet their liabilities by earning stable and relatively predictable long-term returns. As a result, many are building up their direct investment teams in key markets to seize opportunities.

But as more investors pile into the sector there is an increasing dilemma – namely a surplus of capital chasing a relative dearth of core assets.

To some extent, this is redefining what is perceived as ‘infrastructure’.

For example, the investment by pension funds and sovereign wealth funds in top-end deals is incentivising closed-end funds, which have shorter investment cycles, to focus increasingly on mid-market deals and bilateral opportunities away from the regulated infrastructure sector.

Instead they are targeting assets that share some of the attractions of classic infrastructure, but without necessarily having the same monopolistic features – assets such as leasing operations, district heating or oil storage.


This broader trend presents a challenge for Abertis, particularly as it is focusing on one specific segment of the infrastructure sector.

The company’s strategy is to spread its interests and exposure across multiple geographic markets, with a focus on acquiring assets that offer good, stable, long-term cash flows (many of the concessions have lifespans of between 25 and 40 years).

It has expanded rapidly into key European markets, notably France, Italy and the UK, as well as into the U.S., Chile and Brazil, seeing the number of kilometres of road it manages directly almost double from 3,756km in 2009 to 8,300km in 2014.

Acquiring these prized assets sometimes involves taking part in public tender exercises, but the preferred route is to acquire majority holdings in companies that already run concessions, often working in unison with other infrastructure investors, such as the big pension funds.

“Either way, Abertis has to manage an intricate network of partnerships and commercial relationships in very diverse jurisdictions,” says Pablo. “That can be tricky, not least because the big pension funds may well be a competitor in one market and a potential business partner and co-investor in another.”


A&O’s strategy to build a network of international offices, offering clients both a depth of local market knowledge and global reach across borders, fits neatly with supporting a company like Abertis.

In jurisdictions where A&O has an office, the firm is able to provide the sort of direct support and resource that Abertis has always been used to in Spain, says Pablo. Elsewhere, A&O works in partnership with its network of more than 230 relationship law firms to provide high-quality support and advice on the ground.

So what kind of support and reassurance is Abertis looking for from the firm, particularly in jurisdictions like Brazil, India and, to some extent, China, where A&O, as an international law firm, is not allowed to offer local law services?

“They expect us to offer them a good understanding of the local market, how it works, an insight into how the public administration operates and how concession contracts work within each jurisdiction. They also want to understand the broader local legal system and if they can trust it,” he says.

And there is one other crucial element. “Everywhere, they want assurance that we will provide services of the same high quality as efficiently as possible.”

“It takes a long time to build a really strong client relationship and, in the end it depends on establishing a strong sense of trust and mutual understanding,” says Pablo.

“We’ve built our own team to really focus on their needs and we are now at a point where they really trust us, particularly in doing big deals abroad but also on day to day work within Spain. They tend now to see us as colleagues, as part of the team.”


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