CapAsia exits Thai toll road

Don Muang Tollway (DMT), an elevated highway that runs from central Bangkok past the airport and up to Rangsit in the north, didn't suffer much physical damage. However, it was brought to a standstill for about six months after being turned into a car park by drivers who wanted to save their vehicles from the floods.

"People just drove their cars up there and parked them, we had a complete drop off in traffic," says Johan Bastin, CEO of CapAsia.

The Southeast Asia-focused infrastructure player was an investor in DMT and the flooding helped dictate the timing of its exit. Bastin and his team decided that once revenues were restored to pre-flooding levels - which involved waiting for the airport to reopen - they would consider putting the asset up for auction.

This process was completed last week as CapAsia and co-investor Bank of Tokyo-Mitsubishi UFJ (BTM) sold their 29.45% stake in DMT to for $132 million to a newly announced joint venture between Hong Kong-based First Pacific and Philippines infrastructure developer Metro Pacific Investments Corporation (MPIC).

"We decided to go with the bidder that had a combination of the highest immediate cash offer and the lowest level of change to the share purchase agreement, which meant a better chance of it closing within a given time period," says Bastin. "The earlier non-binding bids were lower than the binding bids - that shows the level of interest."

He describes the return as a "very healthy money multiple and a healthy IRR versus what you typically expect from infrastructure."

There are three reasons for this. First, CapAsia claims to have added incremental value to the business by improving corporate governance and operational inefficiency, and optimizing its capital structure. DMT has also benefited from increased use of the airport.

Second, it got the DMT stake at a discount. This was the only asset in Babcock & Brown's Asia infrastructure fund and with the PE firm looking to exit following the global financing crisis CapAsia bought a 50% LP interest - the other half was held by BTM - for less than the official valuation for the entire fund of around $90 million.

The fund acquired the stake in DMT in 2007 and CapAsia's bought into the fund in September 2009, via the South East Asian Strategic Asset Fund.

Third, DMT has a scarcity value as one of only two private toll roads in Thailand. And in First Pacific and MPIC, CapAsia had two of multiple willing buyers. "We are seeing more regional strategic investors becoming active in Southeast Asia, particularly from the Philippines, but also from Indonesia and Malaysia," Bastin says.

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• Topics
• Exits
• Infrastructure
• Infrastructure
• Infrastructure
• Southeast Asia
• Infrastructure
• Exit
• CapAsia
• Southeast Asia
• Thailand