Our case studies show in practice how our core values and unique approach to investment have successfully helped acquire and grow our client’s assets
The ConnectEast public-to-private transaction is a good example of CP2’s end-to-end internal capabilities.
The ASX-listed company ConnectEast was formed in 2003 to build and operate the EastLink toll road in Melbourne. The road opened in 2008 with initial traffic volumes approximately 30% lower than forecast. The company was forced to conduct two rights issues in difficult equity markets to stabilise the balance sheet by reducing debt.
CP2 built a 27% stake in the company through 2008 by on-market buying, the purchase of a strategic stake provided by the original constructor and underwriting the first rights issue. This stake was gradually increased to 35% by the end of 2010 as permitted by the “creep” provisions of Australian corporate law.
Negotiations with the company resulted in the launch of an agreed bid of A$2.2 billion for the whole company by a CP2-managed consortium of eight global pension and sovereign wealth funds. The transaction was successfully completed by October 2011 and the company delisted.
Since the acquisition, CP2 has focussed on a number of asset management initiatives to protect and enhance the value of our clients’ investment.
Sydney’s AirportLink is a key example of CP2’s philosophy and process producing a successful investment outcome
AirportLink – an example of the CP2 process in action where active asset management, working closely with senior management and government stakeholders, enhanced the value of this asset over time.
When AirportLink originally launched, it was an uneconomic investment, and not surprisingly, failed to meet initial expectations. Within six months it was under administration.
Since acquisition out of administration, CP2 significantly enhanced the value of the asset by identifying the key strategic value drivers not appreciated by other investors.
Key amongst these were:
- Modal share expansion potential, underpinned by a highly effective marketing strategy.
- The asset’s critical nature to the continued economic growth of Sydney.
- A long term concession agreement with a highly attractive revenue mechanism, providing a resilient underlying return.
- The ability to increase value through concession re-negotiations and operational enhancements.