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Strategic equity partnership with global infrastructure leader, Aberdeen
Group Five Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1969/000032/06)
Share code: GRF ISIN: ZAE 000027405
("Group Five” or "the Company" or "the Group")
STRATEGIC EQUITY PARTNERSHIP WITH GLOBAL INFRASTRUCTURE LEADER, ABERDEEN
1. INTRODUCTION
Shareholders are advised that the Company has entered into a sale and purchase agreement and
shareholders' agreement ("Transaction Agreements") with Aberdeen Infrastructure Funds ("AIF"),
a wholly-owned subsidiary of Aberdeen Asset Management Plc., pursuant to which AIF will
acquire a 49.99% stake in Intertoll Europe’s underlying Public-Private-Partnership ("PPP") project
investment portfolio, which houses Group Five’s key European investment and concession assets,
for a total cash consideration of approximately EUR43.0 million or ZAR633.2 million when
converted at the prevailing exchange rate of EUR:ZAR = 14.73 ("the Transaction").
Intertoll Europe’s PPP project investment portfolio currently comprises a 15.00% holding in
Gdansk Transport Company SA ("GTC"), a 10.00% holding in Mecsek autopalya koncesszios zrt
("M6 Mecsek") and a 12.67% holding in M6 Duna autopalya koncesszios zrt ("M6 Duna"). (Intertoll
Europe's interests in GTC, M6 Mecsek and M6 Duna are together the "Seed Assets", detailed
below).
Road Concessions Country Financial Close Km Intertoll Equity Concessions
period
GTC (Phase 1)* Poland 2005
151 15.00% 30 years
GTC (Phase 2)* Poland 2009
M6 Mecsek Hungary 2007 78 10.00% 28 years
M6 Duna Hungary 2006 59 12.67% 20 years
* Collectively referred to as GTC
Following implementation of the Transaction, Group Five will hold 50.01% of the Seed Assets and
AIF will hold the remaining 49.99%. Both parties' interests in the Seed Assets will be held through
Intertoll Capital Partners BV, a joint venture established to facilitate this partnership (the "JV")
with the parties’ relative interests within the JV subject to change based on future investments.
The Transaction creates a strategic alliance with AIF, who will co-invest with the Company in
future projects that provide access to capital, improving Group Five’s ability to participate in the
development, investment, operations and maintenance of global concession assets. Intertoll
Europe will retain its entire Operations and Maintenance ("O&M") capability and current contract
portfolio, whilst enhancing its prospects to secure new projects.
2. THE TRANSACTION
2.1. Nature of the business of Aberdeen
Aberdeen Asset Management Plc. ("Aberdeen") is one of the largest global asset managers and is
listed on the London Stock Exchange with a market capitalization of approximately GBP3.6 billion.
As at 30 June 2016, Aberdeen has approximately GBP301 billion of assets under management
across several asset classes including equities, fixed income, property, infrastructure and private
equity.
Aberdeen, acting through its wholly owned subsidiaries, Aberdeen Infrastructure Asset Managers
Limited and Aberdeen Infrastructure Fund Managers Limited (the "Managers"), is one of the
single largest investors in essential economic and social infrastructure projects via government
PPP and similar projects in Europe, the United States of America and Australia. Aberdeen is active
across a wide range of sectors, including healthcare, transport, housing, education and defense
and has contributed to numerous ground-breaking and award winning developments.
During the course of the last 15 years, the Managers’ have sourced, executed and managed over
150 infrastructure investments in PPP projects.
2.2. Rationale for the Transaction
The Transaction creates a strategic alliance between Group Five and AIF to support the growth of
the Company’s existing PPP business. The Transaction will enable Group Five to source and
participate in further attractive global concession assets, with the potential to procure new O&M
roles in the future, without having to solely invest large amounts of capital.
2.3. Terms of the Transaction
In terms of the Transaction Agreements, Group Five will dispose of a 49.99% stake within Intertoll
Europe’s PPP portfolio to AIF, for a total cash consideration of approximately EUR43.0 million
(ZAR633.2 million), which will include accrued interest from the effective date (1 April 2016) to
the closing date (expected to be on or about 1 March 2017), after deducting any accrued
distributions to be paid to AIF and including any potential contract performance payments due to
the underlying investment portfolio companies at the closing date.
The Transaction proceeds will be primarily retained offshore by Group Five and applied to co-
invest in new projects, alongside Aberdeen through the JV, as and when these projects are
secured and subject to appropriate rates of return.
Following the successful completion of the Transaction and the establishment of the strategic
alliance, Group Five and AIF will together own 100% of the Seed Assets through the JV. Going
forward, the JV will direct its efforts to acquiring further equity investments in similar concession
assets across select markets. In acquiring further equity investments within the JV, it is the
Group’s intention to continue co-investing in the JV. Where Group Five elects not to co-invest
proportionately alongside AIF, the Group will accordingly dilute its shareholding within the JV. The
parties have further agreed to a minimum 5-year lock-in period in terms of the Transaction
Agreements. The JV will endeavor to secure any O&M roles corresponding to such new
investment assets for Group Five thereby delivering on the Group’s strategy of growing its O&M
order book and annuity income.
2.4. Conditions precedent
The implementation of the Transaction is subject to the fulfillment by 30 June 2017, or waiver, as
the case may be, of the following outstanding conditions precedent:
• the approval of the European Union, the Hungarian State and the Minister of Infrastructure
for Poland;
• the approval of the Financial Surveillance Department of the South African Reserve Bank, to
the extent required; and
• standard lenders' consents to the transfer of the Seed Assets.
2.5. Net assets and operating profits of Intertoll Europe’s PPP project investment portfolio
The value of 100% of the net assets of Intertoll Europe’s PPP project investment portfolio at 30
June 2016 was EUR68.4 million (ZAR1,140 million when converted at the prevailing exchange rate
at that time) and the operating profit for the year ended 30 June 2016 was ZAR730.0 million. The
corresponding pro rata share in respect of the historical net assets and corresponding operating
profit of the 49.99% stake the subject of the Transaction would be ZAR569.9 million and ZAR364.9
million, respectively. A disposal of the 49.99% stake, for a total cash consideration of EUR43.0
million (ZAR633.2 million), thus represents an 11% premium to the value of the investments as
reported to 30 June 2016.
The strong operating profit recorded in 2016 represented an exceptional isolated performance
due to maturing project risk profiles, with construction complete and final defects lists
determined and known, actual proven project traffic flows being materially better than those
conservatively forecast at time of tender submission and as a result of the above, actual
underlying project cash-flows were materially better than those originally forecast in the base-
case models compiled at the time of project financial close. The operating profit for the years
ended 30 June 2014 and 2015 were ZAR 83.8 million and ZAR115.7 million respectively.
3. CATEGORISATION
The Transaction is classified as a Category 2 transaction in terms of the JSE Limited Listings
Requirements, accordingly no shareholder approval is required.
Johannesburg
05 December 2016
Financial Advisor and Transaction Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Legal Advisor
HOGAN LOVELLS
Sponsor
NEDBANK CORPORATE AND INVESTMENT BANKING
Date: 05/12/2016 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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