Interview with Giovanni Castellucci
THE ATLANTIA GROUP: SHORT-TERM OUTLOOK AND GROWTH STRATEGIES
Mr Castellucci, how would you describe today’s Atlantia Group and what are its distinctive strengths?
Atlantia is a well-established, dynamic holding company, with turnover of over €5 billion in 2015, capital expenditure of €1.5 billion a year and a long-standing presence in global financial markets, in part due to the balanced relationship between debt and our ability to generate cash.
We operate high-value motorway and airport infrastructure under long-term concessions, located in Italy and other countries with significant growth potential and exposed to the positive impact of a number of global megatrends (GDP growth, urbanisation, demographic change, etc.).
We only need to think that over 60% of Aeroporti di Roma’s traffic originates from overseas and that our Latin American operations are concentrated in the large metropolitan areas of Sao Paulo and Santiago.
Our expertise in managing infrastructure is widely recognised. ACI, the body responsible for passenger satisfaction surveys, has ranked Fiumicino second in Europe for the quality of service provided, ahead of Madrid, Paris, Munich, Frankfurt and Amsterdam.
In July, the Atlantia Group was also ranked the best bidder in the process that will result in the sale of the French government’s 60% stake in the company that operates three airports in the Côte d’Azur: Nice, Cannes-Mandelieu and Saint Tropez.
What are the Group’s strategic priorities?
Atlantia is looking to speed up its international expansion by acquiring attractive motorway and airport assets, whilst continuing to focus on our home market and above all on our investment programme in Italy. Over the next 5 years, we will invest more than €5 billion in Italy through Autostrade per l’Italia and €2.5 billion through Aeroporti di Roma. But our strategic objective is to grow our international presence, increasing the percentage of EBITDA generated by our overseas businesses from the current 25%. Since 2008, when the Group embarked on our global expansion, we have seen the percentage of EBITDA resulting from our international operations rise from zero to 25%, generated by businesses located overseas or from overseas sales, as is the case of Aeroporti di Roma, given that two-thirds of the passengers handled by Rome’s two airports arrive or depart on international flights. Now is the time to take advantage of new opportunities in other countries, where there is major growth potential that we are keen to exploit. The cost of borrowing has never been lower, whilst Atlantia’s credit rating is better than the Italian State’s and we have a strong presence in international markets. Europe’s competitiveness is picking up again and, after the success of our bid for Nice, we are looking about for further opportunities. In the meantime, Atlantia has invested almost €180 million in acquiring a stake in SAVE, the operator of Venice airport, a well-managed airport led by a strong management team. But if we are to continue to acquire international assets, Atlantia must raise fresh capital, partly by selling off minority interests in Autostrade per l’Italia.
This is a major step; why sell stakes in Autostrade per l’Italia to other investors?
Atlantia is a global player and clearly has the financial clout to raise the necessary funds on the capital markets, but the investors currently most interested in entering the sector include large pension and sovereign wealth funds who are keen to invest in Italy. This gives us an opportunity to “rotate” our invested capital by allowing international partners to acquire our Italian assets in order to reinvest the proceeds overseas. It is up to us to weigh up the best possible mix of financing for future initiatives (debt or the sale of minority stakes), with a view to avoiding any dilutive effect for our shareholders. This gives us an additional edge, especially as, being a strong and credible business, we have significant access to capital provided by external partners.
Why are major funds interested in entering into partnership with your Group?
We are industrial partners with expertise that financial investors don’t possess, thanks to our excellent technological know-how that gives us distinctive strengths in all areas, ranging from design through to construction and traffic management technology. We offer integrated solutions capable of handling the most complex projects in the world, such as the Variante di Valico, completed in 2015: 59 km of upgraded motorway between Bologna and Florence and a key component of Autostrade per l’Italia’s investment programme. In terms of excavated volume, it was comparable to the Channel Tunnel and represented a highly challenging project from a technical viewpoint, carried out in one of the most morphologically and geologically complex landscapes in Europe.
Can you see other areas for expansion?
We aim to exploit our know-how in the field of electronic tolling and transport payment solutions. Telepass is the most widely used electronic tolling system in Europe, with around 9 million devices in circulation. In 2004, we installed Europpass, the world’s first free-flow tolling system, on over 2,000 km of motorway network in Austria. In 2011, as part of the Ecomouv Consortium, the Atlantia Group won the contract to implement and operate a satellite-based tolling system for heavy vehicles on 15,000 km of the French road network. We are also planning to bid for the contract for a satellite-based tolling system in Germany, with the tender process due to be held in the next two years.