Private Equity Deal of the Year: OHL

Private Equity Deal of the Year: OHL


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IFM Investors’ $2.6 billion acquisition of Spain’s OHL Concesiones, which closed last April, is notable for many reasons. It was the biggest transportation infrastructure deal in Latin America in 2018. It was the firm’s single biggest deal in Latin America. Just as important, it represented the emergence of a pan-regional investment strategy rather than a country-by-country approach.

OHL, which develops, maintains and manages transportation infrastructure, has a portfolio of 20 concessions operating in Mexico, Colombia, Peru and Chile, as well as Spain. The portfolio includes 14 toll roads, three ports, one airport and one light rail asset. All had stable cash flows, with an average concession life longer than 29 years.

IFM, with about $53 billion under management, is mostly funded by Australian pension funds

This was a complex deal across five countries and included greenfield assets with unfunded capital expenditure commitments and currency risks. It also meant dealing with different regulations within each country and then varied regulations for individual assets classes.

The deal was also negotiated at a challenging time because of the regional scandal surrounding infrastructure projects. IFM said it would revamp compliance policies and procedures and improve governance and transparency at OHL.

In the end, the complex due diligence required five different legal advisors and the involvement of separate teams in all five countries.

The transaction gave IFM indirect control of OHL México, which was already part of the fund manager’s portfolio. Mexican regulations required IFM to make a compulsory tender offer for the minority interest it didn’t own. In April, OHL and IFM's investment vehicle Magenta Infrastructura launched a tender offer for the outstanding 14.15% in OHL Mexico, offering up to MXN6.54 billion ($357.5 million) for the remaining stock.