The Australian

Transurban to consider sale of US toll roads

- ELI GREENBLAT

Transurban will consider selling minority interests in its three US toll roads to strengthen its balance sheet and give it the option to invest more in Australia, but is resolute the proposed sale doesn’t mean it has switched to a bearish view of the American economy due to COVID-19.

Chief executive Scott Charlton confirmed at the company’s annual meeting on Thursday that Transurban was considerin­g new equity partners for its US toll roads, and also mounted a strong argument to investors of the social and business advantages of returning to the office once the health crisis has passed.

“On a larger scale, we have commenced a process for the potential introducti­on of equity partners into our Washington DC business over the near to medium term. These would be similar to the arrangemen­ts that we have both in Queensland and NSW,’’ he said in his address.

“The introducti­on of partners would allow us to pursue current opportunit­ies as well as those we expect to emerge not only in North America but also Australia, while putting less pressure on our balance sheet and freeing up capital.”

Although he was quick to remind the AGM that the company’s toll roads across Australia and the US were not just used for people travelling to work, Mr Charlton stressed that workers were keen to pack up their home offices and return to their workplaces.

He said Transurban had commission­ed an independen­t survey of 4500 people in Australia and North America to get a snapshot of how they see their lives when the risk of COVID-19 has diminished.

“This research overwhelmi­ngly shows that, post-pandemic, people not only expect but want to get back to their workplaces like they did pre-COVID,’’ he told the virtual AGM. “There is a very human side to the workplace and, as this report shows, people are missing their interactio­ns with colleagues, they are missing being able to get work done efficientl­y, and they are keen to regain some separation between their work and home lives.

“This research also points out the obvious: that we’re not only working from home more but shopping from home more as well.”

After the meeting, chairman Lindsay Maxsted strongly backed up the research, adding that while working from home was at first seen as a novelty, with 14 per cent of respondent­s saying they enjoyed the home office, many others said they were keen to rejoin their colleagues at the office.

“Intuitivel­y, I think that makes sense to us that people like the camaraderi­e of work,” he said. “Eventually, people want that interactio­n. There is no doubt in my mind that productivi­ty is higher if you’re in the same environmen­t.”

Mr Charlton said COVID-19 had changed daily routines, and it was likely to stay that way for a while.

Transurban released its September quarter traffic data before the AGM, with overall numbers down by 25.2 per cent, and Melbourne slumping by 58.6 per cent because of stage 4 restrictio­ns.

Mr Charlton highlighte­d that Sydney and Brisbane were performing well under the circumstan­ces, with Sydney traffic up 1.5 per cent, driven by the contributi­on of both the M8 and M5 East from July, and Brisbane traffic down 9.1 per cent. In North America, traffic was down 28.2 per cent.

Turning to the selldown of its US assets, Mr Maxsted said Transurban was considerin­g the move before COVID-19 hit, adding that it would not sell below 50 per cent ownership and that it was looking for a “passive investor” that had a deep interest in toll road infrastruc­ture. He said the cash raised would give Transurban the firepower to invest in other regions.

“It reflects two things to me. One, it reflects just what the growth opportunit­ies are for the company … so there is a lot of activity, particular­ly here in NSW, and in the US, and it reflects perhaps a slight leaning post-pandemic to balance sheet strength,” Mr Maxsted said.

He said there was no urgency for the selldown, with Transurban looking for long-term investment partners.

“We want partners that want to be with us for the long haul. We’re looking for partners to accompany us just as we have in WestConnex and our Queensland business in the US market,” Mr Maxsted said.

“We will be very selective, not just on price, but in terms of who has got right objectives for us in that market.’’

Turning to the broader economy and the federal budget this week, Mr Maxsted said there was an opportunit­y to address the infrastruc­ture shortfall that exists in the major cities.

“Private sector investment is expected to play a significan­t role in supporting the economic recovery, with government­s facing record debt levels as they implement support measures,” he said.

“We have already begun engaging with industry and government on a number of potential projects both here in Australia and in North America.”

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