Sacyr courts large infrastructure funds to sell its water subsidiary

A new jewel has emerged for the all-powerful investment funds. Sacyr has just launched the sale of 49% of its water management subsidiary and has already tested the appetite for this asset among a large number of investors who have an eye on the Spanish market, according to financial sources. All this is part of the Spanish company’s plan to reduce debt, which exceeds 7,000 million, with sales of its non-strategic businesses.

Back to basics. It is a common strategy in the construction industry to divest their service management businesses to focus on construction and tenders. Within this framework, which the company put black on white in its latest strategic plan to be met before 2025, at the end of last year Sacyr announced the sale of 49% of its water business and that of facility management (management of service contracts). The company explained this decision in its intention to reduce the net debt with recourse, which reaches 689 million compared to the 7,600 million total liabilities accumulated by the firm at the end of the third quarter of the year. In addition to these divestments, the company is also considering the rotation of concession assets, with which they also hope to rebalance the group geographically.

The company has already detected increased market appetite for its water business. It has hired Société Générale to pilot the process, who has already contacted potential investors interested in the transaction. And he has distributed the sales book among them, so now he awaits the first indicative offers for next month.

Among the interested investors, market sources cite the large infrastructure funds that operate in Spain, such as Brookfield and Macquarie, as well as other medium-sized ones such as DIF, Infravía, EQT or Aberdeen. And insurers such as Axa and Asterion also appear in the early stages of the bid as the only Spanish fund in contention.

Preliminary valuations for the entire asset are around 200 million euros. In this way, Sacyr would enter about 100 million in this transaction to reduce its debt. Company sources have declined to comment and indicate that the process follows its usual course.

The other ongoing operation seems more complicated. The water sector has traditionally been very attractive for funds. In Spain, for example, Antin took over the Miya Water company in 2020 from Bridgepoint for 700 million. FCC already carried out a very similar operation with its water subsidiary, Aqualia, in which it sold 49% for 1,024 million.

But this does not happen in the same way with the rest of the businesses in facility management. For this reason, Sacyr has decided in this case to carry out a process in parts, with the aim of guaranteeing success. Santander and Nomura are the entities chosen to lead the process, which is still in a much more embryonic phase. For now, they have made the decision to sell separately Valoriza, which brings together the waste management businesses, and the rest of the service contracts. They consider that the part of the waste will have an easier sale and that with this they will be able to maximize the value obtained by the transaction.

If the potential buyers of the water part are infrastructure funds, in the case of the other two divisions, everything indicates that the recipients are investment funds. private equity. And the sector has been experiencing a deep crisis in recent months, which has practically annulled all ongoing sales processes. The rise in rates has shut down the financing market for these vehicles, which plays a key role in their investment strategy. For this reason, the strategy of Sacyr and its advisors is now to wait for the market to reactivate and choose to prioritize the transaction with the water part.

Ferrovial has taken years to sell its large service business piecemeal, which has ended up in the hands of ACS and Apollo. Florentino Pérez’s company, for its part, sold Urbaser to the Chinese group CNTY and they transferred it to the Platinum fund in 2021.