The road to Xanadu was paved by Genghis Khan
Recently I mused on "The Silk Road as seen by a Venetian", pondering how an individual trader, Marco Polo, was able to discover vast swathes of human geography and culture on the far side of Eurasia, the “world island”.
His adventures were in fact made possible due to the exploits of one man, Genghis Khan, who single-handedly created history’s largest territorial empire ever.
Polo entered the good graces of Kublai Khan, grandson and political heir of the man from the Mongolian steppes whose influence ran from China to Eastern Europe, and himself the founder of China’s Yuan dynasty and champion of Beijing as its capital. It was Kublai who created the first paper currency with no expiration date, convertible against precious metals.
While some opaque histories depict Genghis as a ferocious slayer of peoples, he managed to apply some basic principles and deploy savvy infrastructure networks to bring the area around the Silk Road into one cohesive political environment.
Recreating that legacy today would be a boon for the roughly 3 billion people – almost half the world population – who live in countries that formed part of the Mongol empire at its peak.
China’s well-publicized Belt and Road initiative, sometimes referred to as the new silk road, aspires to expand business networks and economic cooperation in just that way.
What’s needed now is the spirit of Genghis Khan – ambitious players to fill the space.
Unlike the 13th century, the world is more aware of the multiplicity of its needs, and there are numerous ambitious players vying to take on major roles. Moreover, the global arena is larger, with Asia, Europe and the Americas - and eventually Africa – all ramping up for major infrastructure developments.
China’s Belt and Road Initiative involves €1,7 billion new infrastructure projects in 68 countries, the European Union’s so-called Juncker Plan eyeing EUR500 billion in new public and private investments, while in the United States of America, the White House has just unveiled a $1.5 trillion infrastructure plan. Executive success for those visions will depend on a lot of horses, and also on coherence and discipline among their riders.
Atlantia has its cards in order.
”Atlantia began as Autostrade, managing the country’s main toll highways and privatized in 2000”, remembers Mr Massimo Sonego, head of Investor Relations at Atlantia Group. “Today on top of the 3,000 kilometers of national roadways, set up in Autostrade per l’Italia, Atlantia also manages almost as much outside of the country, in Brazil, China, India and Poland. It is also a big player in air travel, owning Aeroporti di Roma and airports in France’s Côte d’Azur, which all together handle 60 million passengers a year”, he proudly remarks. “And now we are ready to actually double our size in one step and position Atlantia as the undisputed leader in the world in transport infrastructure.”
With Marco Polo’s eyes it looks like Atlantia made two Genghis Khan moves in 2017.
First, it opened the capital structure of Autostrade per l’Italia, which manages the Italian tollroad concessions, to institutional investors including large European ones, such as Allianz, but also the Silk Road Fund – a development-and-investment fund set up by large Chinese state institutions with a mandate to support cooperation and connectivity under the “Belt and Road” flag.
It thus created a very direct link to the idea of a cohesive Eurasia, and did so through its original and core operating asset.
Second, it launched a €16 billion takeover bid for Abertis, a Spanish peer, with the eye of creating the world’s largest highway operator managing more than 14,000 kilometers of roads in 19 countries.
That move evokes a globalized gambit, albeit a bit more modest than that of Genghis Khan, who a shaman once said had been given the entire world by none other than the Eternal Blue Sky, the spirit sustaining the universe in central Asian lore.
Now, Atlantia’s bid for Abertis was contested when Hochtief, a German construction group controlled by Spain’s ACS, made a rival bid of €18 billion.
While Genghis Khan is a bit infamous in many parts for total war tactics, the fact is that he was extremely concerned about casualties, not least as there weren’t that many Mongols in his horde. The record shows he was a geopolitical wheeler and dealer from the start, and one of his tactics was to offer prestigious and powerful roles to competent members of the peoples he subjected.
In March 2018, Atlantia forged a deal with its rivals to make a joint investment in Abertis and purchase a 24% interest in the share capital of Hochtief.
“The result is an alliance between a giant in the world of building complex infrastructures and the largest portfolio of highway concessions in the world. The power of this partnership to tackle emerging new opportunities in private-public infrastructure projects is unparalleled in scope, depth and geographic span, from America to Asia“, made clear Mr Sonego.
Atlantia has always had a clear vision and goal of becoming the world’s leading infrastructure player and the privileged partner of governments and stations designing and rolling out the networks of the future. With existing cash-generating assets, cutting-edge tolling technology and now able to tap formidable construction know-how, the group is well placed to deliver on long-term, complicated projects.
Of course, no shaman has proclaimed that Atlantia is the heir to Genghis Khan. It would be silly to aspire to that and arguably undesirable that anyone does. In fact, he had multiple heirs, which is one of the reasons that today he can be seen as the unifier of China, the father of Mongolia, an uncle of sorts to numerous peoples in the Central Asian steppes, not to mention the scourge of Iran.
But there is a role for channeling his spirit to push through change. Consider that a man who grew up in a tent, who foraged for wild foods to survive as a child, went on to outwit ancient Chinese dynasts and adopt siege warfare tactics and master even the catapult. In the end, his legacy was Xanadu, the summer idyll his grandson Kubilai built as a resort where philosophers could pass the hot season discussing the merits of various cultures and religions.
In Genghis Khan’s day, and even with the regional peace his conquests catalyzed, it took almost a year for a person to travel between today’s cities of Beijing and Istanbul. One of his key empire-building tools was the Yam, a kind of pony express system that allowed information to travel as many as 400 kilometers a day.
That’s the kind of force multiplier Atlantia wants to be – for shareholders and stakeholders alike.
If the opportunity arises, it will also bid to help build and run the road to Xanadu.