SBU EMEA & New Markets

ROADIS EMEA & New Markets is headquartered in Madrid and is responsible for asset management and growth in Europe, the Middle East and Africa, as well as markets where the company is not yet present. In Spain, ROADIS operates a major shadow toll road in the center of the country, the Madrid-Ocaña stretch of the A-4. We have set ambitious goals and are constantly looking for new business opportunities, mainly in Europe and in new markets in South America.

2017 was a pivotal year for ROADIS EMEA & New Markets. We expanded into a new territory, Portugal, a country with a regulatory scheme for infrastructure that is very much in line with our development goals. The final agreement for the acquisition of two Portuguese roads (AEA and AELO), which fit perfectly with our strategy, was made in an environment of fierce competition for good quality assets, proving ROADIS’s competitive advantage in securing opportunities.

• AEA is composed of two toll highways, the A8 and the A15, which span a total of 170 kilometers. The A8 is a key highway in Portugal’s economic corridor between Lisbon and Porto, while the A15 links the towns of Caldas da Rainha and Santarem.
• AELO spans a total of 102 kilometers from Portugal’s west coast to its interior. It is composed of a series of highways that provide a connection between the main north-to-south motorways including the A1, A8 and A17 in the Leiria region, one of Portugal’s most important tourist regions.

These 2 new assets will help us achieve balance within our asset portfolio on two levels: between developed and emerging countries on one hand; and between different business models on the other with the inclusion of AELO, which operates under an availability-based revenue model.

In addition to our entry into Portugal, some of the highlights of 2017 are:

• The A-4 toll road, between Madrid and Ocaña (Spain), followed the path of recovery and growth taken by the Spanish economy for the third consecutive year.
• Development of the first phase of an app (viA-4u), which aims to involve highway users in improving road safety by sharing their experience and perception of events that occur on the highway.

Regarding business development activities, ROADIS EMEA & New Markets has deeply analyzed interesting opportunities in strategic markets for the company such as Portugal, Spain and Greece in Europe or Chile, Peru and Colombia in South America. All this work will help us set the path towards growth in those countries in 2018.

Spain’s economic growth remains robust and reached over 3% in 2017 for the third year in a row, outpacing most euro-area countries. This recovery is supported by a more balanced growth pattern than in the pre-crisis years, with both domestic and external demand contributing to growth.

Strong employment gains underpin household incomes and solid consumer spending. Business investment continues to grow, supported by increased confidence and improved profit margins.

Private investment has also increased, reflecting employment gains and favorable financing conditions for both households and non-financial corporations. Structural reforms have contributed to improving competitiveness and supporting export growth, as well as stimulating trading partner demand.

GDP growth is projected to settle at slightly above 2% in 2018 and 2019, as the pace of domestic demand growth slows.

In this new economic environment in Spain, with new plans and opportunities in the field of road infrastructure, ROADIS will take advantage of its local presence and operational knowledge to re-launch its commitment to Spain and channel part of its target investment into this market.

PIC is the Spanish government’s new 5-billion-euro PPP investment plan that will serve to complete different sections of roads, ease bottlenecks suffered on some highways, and improve and adapt highways to comply with regulations governing emissions, safety, noise and maintenance. The main objective is to rebuild roads through public-private collaboration. It will involve 5 billion euros of investments over the next four years to improve and expand the national motorway network and increase employment. The plan will include 20 to 25 PPP projects, with investments ranging between 100 million and 400 million euros per project. The first projects are expected to be tendered by 2Q 2018.

The second program involves the privatization of nine toll highways that are undergoing liquidation and which are expected to be managed by the public entity SEITTSA from June 2018 until they are put out to tender. The package includes the radiales (radial highways) in the metropolitan area of Madrid and two highways in the Mediterranean corridor. It is expected that they will be transferred to the private sector by the end of 2018, in two packages, with a long-term concession scheme of 25 years.

Regarding the evolution of traffic in 2017, it should be noted that, due to the improvement in the general economic situation, with the consequent increase in the mobility of people and goods, there has been an increase of 4.43% in the traffic registered on Spanish toll roads (2017 YOY growth) standing at an average of 16,537** vehicles per day, which is the highest figure in the last 7 years. The radial toll roads mentioned above are those that recorded the biggest increase in traffic between January and November.

The traffic performance forecast for 2018 remains positive and is expected to be in line with GDP growth on the freeway network and be slightly above that for the toll road network.

*Source: 2015 EUROSTAT published by the Ministry of Development
**Source: SEOPAN. Toll Stretches Full Spanish network