International Public Partnerships Limited (LON:INPP’), the listed infrastructure investment company, announced that it has entered into a sale and purchase agreement to acquire a further 51% shareholding in BeNEX GmbH from Hamburger Hochbahn AG, the City of Hamburg’s municipal public transportation company.
The Company has agreed to invest up to approximately €54 million of which part will be subscribed immediately as additional capital to BeNEX (which will be used primarily to reduce certain debt which was linked to a requirement for HHA to be a continuing shareholder) and the remainder will be used to acquire the additional 51% shareholding. The transaction will therefore see INPP’s ownership increase from 49% to 100%. The payment to acquire the shareholding will be deferred and is expected to be paid over the period to 2026 and is expected to be funded by a return of capital from BeNEX over the same period.
BeNEX both leases rolling stock and invests in train operating companies (‘ToCs’) which operate rail services under concession agreements with German federal states. When the Company acquired its initial 49% stake in 2007, it formed a partnership with HHA to assist in growing BeNEX’s business to benefit from the reform that was taking place in the German rail industry.
Since acquisition, BeNEX has been a successful investment for INPP and it has seen continued growth. It has a highly experienced management team that actively manages its fleets and operations. As of 31 December 2018, it had 86 trains on lease to seven different ToCs (six of which are fully or partly owned by BeNEX). Under the joint ownership of HHA and INPP, the number of operating concessions managed by BeNEX ToCs increased from eight to 12.
Key investment features include:
· A federal state is the public-sector counterparty for each individual train operating concession;
· Concession agreements typically provide an indexed revenue stream to adjust for operating cost increases over the term of the concession;
· BeNEX does not take risk on passenger numbers or fare receipts on the majority of its concessions; and
· BeNEX benefits from a strong and successful management team.
The Company’s acquisition of the additional stake in BeNEX is subject to a number of conditions precedent. These are expected to be met over the next two months and financial close is anticipated before the end of June 2019.
