Ferrovial cherishes its American dream with the IPO on Wall Street

Ferrovial adjusts its socks. It's not a joke. The company chaired for 24 years by its first shareholder, Rafael del Pino (he has 20.4% of the capital), has been working for more than a year to go public in the United States and comply with the Sarbanes-Oxley Act (Law Sox, “socks” in informal English or slang). This standard has regulated since 2002 in the United States the presentation of financial reports and the audit of companies that are listed or want to be listed. Ferrovial wants. The company seeks the boost of Nasdaq—the second largest stock market in the United States—to fulfill the strategic plan it calls Horizon 26, focused on sustainable infrastructure in the United States and Canada and with the radar focused on mobility, energy and transportation. .

Ferrovial had planned and announced the stock market debut on the other side of the Atlantic for the first quarter of this year. It has not been possible, more information has had to be provided and the process is not closed. A setback because the company justified the move of its headquarters to the Netherlands a little over a year ago, precisely, as a necessary step to jump into the large US market and attract investment. With his departure from Spain, he provoked a strong business and political controversy whose echoes remain, although macerated in the good results of the last year: more business - income of 8,514 million, an improvement of 12.8% -, more profits - 460 million net, an increase of 150%—and more investments—545 million—. Investors are waiting for good news and the stock has risen more than 30% in a year.

The interest in seducing investors in the United States is logical. “It puts us on the map as a reference company in infrastructure,” the company explains. “Listing on the Nasdaq will allow us to access an investor base that better fits our international profile. The triple negotiation [Madrid, Amsterdam and New York] will make Ferrovial an even more solid company,” these sources add. Bankinter analysts endorse the move: “More than 80% of Ferrovial's valuation comes from the US and Canada. Both economies offer a favorable environment for infrastructure in 2024, with economic growth, which will translate into increased traffic; inflation still high that will allow rates to increase; and end of the process of rate increases, even possible reduction at the end of 2024 or beginning of 2025." There is more: 92% of the investments until 2027 are associated with the North American area. “We maintain a positive vision of the company in the long term due to the quality of the assets,” says Ángel Pérez Llamazares, from Renta 4.

Even mature concessions – such as the Canadian highway 407 ETR – along with American ones in the launch phase in Texas, Virginia or Charlotte are performing better than expected, analysts emphasize. It is lubricant for a complex business engine, made up of highways, airports, energy and construction. Although the group's debt is relatively high – around 6.8 billion euros – it is linked to secure concessions and structured for the long term. The maturity schedule is comfortable, 500 million on average annually, and the parent company's cash sounds good: 950 million - data from 2023 -, detailed in Bankinter.

Financial position

The financial position is important because part of the investment in new concessions and the continuation of the asset management process—rotation—depends on it to take favorable positions and sell more. JP Morgan points out in a recent report that the company is optimistic “about future investment opportunities in highways managed in the US, with an identified portfolio of seven projects.” A key part of asset management is the announced sale of 25% of Heathrow airport (United Kingdom) to the Ardian and PIF funds for 2,735 million euros.

Regarding the sale of Heathrow, Alantra analysts recall that the agreement is conditional on Ardian and PIF acquiring up to 60% of the stake and finding partners to share the investment. One of the possible candidates was the Australian fund Macquarie, which has ruled out participating in the operation. “Macquarie's withdrawal is negative news for Ferrovial,” these experts maintain. Ferrovial admits that “there is still no certainty that the [Heathrow] transaction will be closed.” In any case, it maintains a 50% stake in the Aberdeen, Glasgow and Southampton airports, in the United Kingdom; 60% at Dalaman airport in Turkey, and 49% at New Terminal One at JFK airport in New York.

Although with open fringes, Ferrovial continues with the task that it detailed in its last annual report and which basically consists of updating “the strategic programs aimed at adapting the technical and organizational requirements required by Sarbanes-Oxley (Sox) that began to be implemented. mid-2023, as well as the SEC Final Rules on Cybersecurity.” Among other things, it has to provide exhaustive information on the recently announced purchase of 24% of IRB Infrastructure Trust from the Singapore sovereign fund (GIC) for 740 million. IRB has 12 highway concessions in India and a committed portfolio of three additional concessions.

In the markets and in business there are always risks. That is why some steps, such as the transfer of headquarters, are delicate. “It is likely that the movement has not been understood correctly by public opinion,” the company admits, “but we are satisfied with the process undertaken because it brings us closer to our objective of continuing to strengthen our international presence.” For those who criticized the change of headquarters, even from the Government, the group has two messages. One, that since the move, Ferrovial has contributed more to Spain; and two, that beyond the location of the headquarters, Ferrovial continues to be “a Spanish company, because our roots are here and our commitment to Spain remains intact.”