Transcript No Slide Title

Chilean Infrastructure Industry
Overview
Fernando Zavala
November, 2006
1
Brief Overview of the
Chilean Toll Roads
Industry
Introduction
 The urban toll road infrastructure business in Chile has been extremely active
 Project Financing and the formation of consortiums were critical aspects during
the first phase of the industry
 Original investors/sponsors are looking for options to monetize the capital
gains originated from investments
 Groups specialised in toll roads operation becoming increasingly interested in
the sector.
 Specialised investment funds monitoring the evolution of the sector –
difficulties to exit investments in the short term
 Costanera Norte is the first successful M&A transaction where the original
investors exit the company, and a global toll road operator enters into the
country.
 ABN AMRO has been a leader in this industry in Chile since its origins
Chile Macro Overview – High growth combined with moderate risk
 Excellent economic performance
 Investment grade status since 1992
 Average 6% real GDP growth over the last 20 years
 Well controlled inflation-targeting regime averaging a 4.1%
inflation rate over the last 10 years
 Chile is the most stable, most transparent and best performing
economy in Latin America
Key
Facts
 Positive macroeconomic outlook
 Strong real GDP growth forecasted for 2006 (4.9%) and 2007
(5.6%)
 Stable inflation forecasts for 2006 (2.9%) and 2007 (3.0%)
GDP PC (US$) and real GDP growth
10,000
6.2% 6.3% 4.9%
8,000
6,000
5.6%
Inflation (CPI y-o-y changes)
8.0%
6.0%
3.4% 2.2%
3.9%
4.0%
4,000
3.7%
2.6% 2.8%
2.0%
2,000
0
01
02
03
GDP per Capita
04
05
06F
07 F
Real GDP growth
2.4%
2.9%
3.0%
06F
07 F
1.1%
0.0%
01
02
03
04
05
Chile Macro Overview – High growth combined with moderate risk
 Key pillars of the model:
 Balanced public accounts
 Independent Central Bank
 Solid financial system
Key
Facts
 Stable & transparent politics
 Open and developed local capital markets
 Strong and diversified mix of exports; increasing imports
following GDP per capita growth
 Free Trade Agreements: EU, USA, Korea, Canada and Mexico.
Presently negotiating with China and India, among other
Sovereign Risk (EMBI)
Argentina
286
Brazil
218
Chile
81
Colombia
172
Mexico
111
Peru
142
0
50
100
150
200
250
300
Concessions Awarded to Private Sector in Chile
Total awarded volume of business over US$ 6.3 Billion
48 Projects Awarded to Private Companies

Total Concession Investments
20 Highways: US$3,805M

10 Airports: US$272M

9 Urban Projects

7 Highways: US$1,722M

2 Public Transportation (Intermodal
Stations): US$50M

3 Prison Infrastructure Programs (8
prison precincts): US$205M

2 Dam: US$140M

4 Public Edification: US$114M
Source: MOP
Penitentiaries
3%
Public
Transportation
1%
Dams
2%
Public
Edification
2%
Urban
Highways
27%
Airports
4%
Interurban
Highways
61%
Concession Projects 2006 - 2008
35 Projects to be awarded totaling more than US$ 3.6 Billion in investments
Project Portfolio 2006 - 2008

Road infrastructure projects
(10): US$1,621M

Hospitals (3): US$300M

Airports (4): US$100M

Dam (2): US$390M

Penitentiaries projects (2),
Railroads (1) & Others (2):
US$344 M

Other road infrastructure
projects under study (11):
US$884M
Source: MOP
Expected Concession Investments
Other road
infrastructure
projects under
evaluation
24%
Road
infrastructure
projects
45%
Penitentiaries,
Railroads &
others
9%
Dams
11%
Airports
3%
Hospitals
8%
Toll Road Concession Operators in Chile
URBAN TOLL ROADS Ownership
There will be
players either
divesting noncore
investments
or partially
monetizing
/ recycling
equity
investments.
Autopista Central
Vespucio Norte
48%
46%
Anillo El Salto-Kennedy 50%
Vespucio Sur
50%
Radial nor-Oriente 100%
Vespucio Norte
Anillo El Salto-Kennedy
Vespucio Sur
50%
Costanera Norte
100%
Autopista Central
48%
45%
50%
Toll Road Concession Operators in Chile
INTERURBAN TOLL ROADS Ownership
There will be
players either
divesting noncore
investments
or partially
monetizing
/ recycling
equity
investments.
Los Libertadores
Los Andes
100%
100%
Rutas del Pacifico
50%
Elqui
Litoral Central
72%
50%
Autopista del Sol
100%
Los Lagos
Rutas del Pacifico
88%
50%
100%
Nogales Puchuncavi
Autopista del Maipo 100%
Ruta de la Araucanía 100%
Talca Chillan
Ruta de los Ríos
50%
Litoral Central
Autopista del Itata
Autopista del Aconcagua
100%
100%
Autopista del Bosque
100%
Melipilla
100%
76%
76%
Central Chile – Metropolitan Region Concession Highways
Autopista Valle
Chacabuco
(Radial Nor-Oriente)
 Sacyr
 ACS 46%,
Hochtief 45%,
Cofide 8%
 21.5 km highway
 29 Km highway
40-yr concession
30-yr concession
San Cristobal Express
(Anillo El SaltoKennedy)
 Hochtief 50%, ACS 50%
Vespucio Norte
Autopista Central
 Urban tunnel
 ACS 48%,
Skanska 48%, Belfi
2%, Brotec 2%
30-yr concession
 60.5 km highway
 30-yr concession
Costanera Norte
 Autostrade 50%,
SIAS 50%
 42.3 km highway
30-yr concession
Vespucio Sur
Vespucio Sur
 Acciona 50%,
Sacyr 50%
 23.5 Km highway
30-yr concession
Source: MOP, Coordinación General de Concesiones
Central Chile (Excluding Metropolitan Region) Concession Highways
Nogales-Puchuncavi
 Delta
Rutas del Pacifico
(Ruta 68)
 27 Km toll road
22-yr concession
 ACS 50%, Sacyr 50%
 137.5 Km highway
25-yr concession
Puchuncavi
Nogales
Los Andes
Viña del Mar
Valparaiso
Casablanca
Santiago 28-yr concession
San
Antonio
Autopista del Sol
 Besalco
 8 Km toll road
 25-yr concession
 OHL
 88.65 Km toll road
30-yr concession
Melipilla
 113 Km highway
Autopista Los
Libertadores
Quintay
 79.8 Km toll road
 OHL
20-yr concession
Litoral Central
 Sacyr 50%, Acciona
50%
Autopista de Los
Andes
 OHL
Embalse
Rapel
Source: MOP, Coordinación General de Concesiones
San Pedro
 102 Km highway
23.7-yr
concession
Regional Interurban Concession Highways
Concesiones del
Elqui
 Sacyr Chile S.A. 75%,
Abertis 25%
Autopista del
Aconcagua
 Bancomext
Tunel El Melón
 Endesa Chile
Talca Chillán
 Cintra 76.43%,
Inversiones Sodeia Cinco
S.A. 23.57%
Autopista del Itata
 Bancomext
Autopista del Maipo
 Cintra
Camino de la Madera
Belfi S.A. 33.9%, Las
Américas A.F.I. S.A.
33.9%, CMB Prime A.F.I.
S.A. 26.5%
Ruta de la Araucanía
Autopista del Bosque
 Vinci
 Cintra
Los Lagos
 Sacyr 88.1%, Empresa
Nacional de Autopistas
11.9%
Ruta de los Ríos
 Cintra 75%, Las Américas
A.F.I. S.A. 25%
Stages of Sector Development
Background
Today…
Stage 1 –
“Construction”
 Toll road concessions
awarded
 Construction period
risks:
– Expropriation
– Completion
– Cost overrun
– Licensing delays
 Project financing
 Negotiation of
complementary
agreements with MOP
 New projects
contemplating MDI
 Second generation
projects + PPIs
Stage 2 – “Operation”
 Pure constructors start
seeking exit alternatives
 “Construction /
operation” players review
portfolio alternatives
 Concession operators
and infrastructure funds
looking for M&A
transactions
 Operation period risks:
– Traffic
– Price & inflation
– O&M cost overruns
– Technology
– Billing & collection
– Political & regulatory
 New complementary
agreements (extensions,
improvements)
Stage 3 –
“Consolidation”
 Trend towards
concentration in fewer
large operators holding
a portfolio of motorway
concessions
 Once scale is achieved:
– M&As
(consolidation /
monetization)
– IPOs (partial
monetization)
2
Costanera Norte &
Transelec Case Studies
Recent M&A Transaction: Costanera Norte Case Study - Chile
 ABN AMRO advised Impregilo SpA in the sale of Sociedad
Concesionaria Costanera Norte S.A. For an EV of USD 625
million
Sociedad Concesionaria
Costanera Norte S.A.
USD 277,100,000
Sale of 100% of Costanera
Norte to Autostrade SpA
and Sias SpA
Sole Financial Adviser to
Impregilo SpA
Chile, June 2006

Deal closed in June 2006.
 ABN AMRO acted as sole financial advisor to Impregilo
SpA, TECSA and Fe Grande.
 ABN AMRO executed this complex project leading to a
successful closing in June 2006.
 Costanera Norte’s deal is the largest M&A transaction in
Chile in the new concession road industry up to date,
Recent M&A Transaction: Costanera Norte Case Study - Chile

ABN AMRO executed the whole M&A process performing several tasks that included, among
others:
– Valuation: using DCF, Trading
and Transaction methods
– Preparation of investment
teaser
– Selection and contact with
potential strategic and
financial investors in Chile and
globally
– Development of the
Information Memorandum for
the transaction
– Negotiation of Confidentiality
Agreements with short-listed
potential bidders
– Guidance to Bidders to
presenting a Non-Binding
Offer
– Selection of investors for the
final phase of the process
– Negotiation with group of short listed
potential buyers
– Coordination of Management
Presentations and Visits to the facilities
– Guidance of Bidders through preparation
and presentation of Binding Offers
– Preparation of Bid Analysis reports to
facilitate client decision making process
– Assistance in preparation of Sale &
Purchase Agreement in conjunction with
the legal advisors
– Preparation and coordination of the Due
Diligence process
– Advisory assistance through Closing
Overview of Transelec Transaction
Key Considerations

Transelec is a regulated transmission business that owns high voltage lines

On June 16, 2006 Brookfield Asset Management and its partners agreed to acquire 92% of
Transelec for $1.55 bn plus the assumption of debt

The consortium acquired the remaining 8% of Transelec in a separate transaction from IFC

ABN AMRO believed that that most bidders would have been comfortable paying up to 10.5x
EBITDA. This led to an IRR of approximately 11-13%.

In our view, the bid for Transelec is an outlier and led to an ROE below 10%.

Other bidders for Hydro-Quebec’s stake were: GE/First Reserve, Abengoa, ISA, Canadian
pension funds (Ontario Teachers’ Pension Fund, Borealis), Terna, Celfin (Chilean investors)
Transaction multiples
Transaction
multiple
ABN AMRO's
estimates
EV / EBITDA
2005 2006E
P/E
12.6x 12.2x
24.7
10.5x 10.2x
18.3
3
Brief Overview Infrastructure
M&A worldwide
Overview of Infrastructure related transactions worldwide
Infrastructure M&A transactions volume 1998 - 2006 YTD
Infrastructure
deals peaked at
US $ 145 Bln in
2006 reflecting
increasing
investor
appetite for
investments
capable of
generating
stable returns
in the long
term
US$ Bln
160
140
120
100
80
60
40
20
0
1998
1999
Source: ABN AMRO
2000
2001
2002
2003
2004
2005 2006
Overview of Infrastructure related transactions worldwide
Largest Infrastructure M&A transactions 1998 - 2006 YTD
Date
Target
Acquirer
Feb 8 2006
Apr 23 2006
May 29 2006
Jan 18 2000
Feb 27 2006
Jun 27 2002
Oct 2 2006
BAA (UK)
Autostrade (Italy)
Kinder Morgan (US)
Coastal (US)
KeySpan (US)
Railtrack (UK)
AWG (UK)
Ferrovial (Spain)
Abertis Infrastructuras (Spain)
Private equity consortium (US)
El Paso Energy (US)
National Grid (UK)
Network Rail (UK)
Osprey Acquisitions (Canada)
Deal Value
(US Bln)
30.2
28.4
27.5
15.7
11.9
11.5
10.3
Source: Thomson Financial

Private equity funds showed increasing involvement in infrastructure related
transactions, accounting for more than 50% of deal volumes in 2006 (comparing
positively with the 2 % involvement recorded in 1998)
Toll road operators valuation – Trading Multiples
Toll Road Operators Trading Multiples
EV/EBITDA
Company name
Mkt Cap
EV
(EURm, 11/7/'06)
AUTOSTRADE
12,789
22,446
Autoroute du Sud de la France 11,503
19,325
Abertis
10,489
14,793
Macquarie Infrastructure Group 8,243
10,942
APPR
6,059
11,170
Cintra
4,921
12,380
BRISA
4,333
6,414
2005
12.1x
12.3x
12.7x
9.6x
11.5x
26.7x
15.3x
2006
11.5x
11.5x
7.1x
10.0x
10.7x
23.9x
14.6x
2007
10.8x
10.9x
6.7x
12.2x
10.2x
21.8x
13.8x
2008
10.1x
10.2x
6.4x
11.3x
9.7x
18.2x
13.2x
Average
12.3x
10.9x
10.8x
10.2x
Note: Numbers in grey have been excluded from average
International listed toll road operators are trading at 10x - 11x EBITDA on average
Toll road operators valuation – Transaction Analysis
Toll Roads M&A Company Transactions
Completion Target name
Acquiror name
Stake
Purchase
acquired(%)
(%) price (EURm)
Date
Pending
Autostrade
Abertis
100%
14,714
25/04/2006 SANEF
Abertis/ AXA / Credit Agricole
Abertis
100%
5,324
09/03/2006 AutorouteSud de France Vinci
50%
5,821
20/02/2006 APRR
Eiffage Macquarie Infr.
Eiffage/
81%
5,551
20/05/2005 Hills Motorway Group Transurban
92%
1,074
19/04/2004 Hills Motorway Group Transurban
8%
57
01/01/2003 Aurea
Acesa (Abertis)
100%
3,102
16/09/2002 ACESA
Brisa
6%
219
05/04/2002 AutorouteSud de France Vinci
14%
771
16/01/2002 CintraConcesiones
Macquarie Infrastructure
40%
741
EV
Turnover
8.27x
8.54x
7.83x
7.64x
25.45x
22.90x
11.96x
7.34x
7.10x
19.70x
Average
8.38x
Note: Numbers in grey have been excluded from average
EV
EBITDA
13.19x
13.26x
12.35x
12.33x
na
na
na
10.52x
na
na
12.33x
Toll road operators valuation – Transaction Analysis (cont’d)
Toll Roads M&A Asset Transactions
Transaction
Date
30/06/2006
19/12/2005
29/09/2005
29/09/2005
20/06/2005
22/11/2004
26/10/2004
23/05/2003
23/05/2003
31/03/2002
29/11/2002
01/10/2002
29/04/2002
20/12/2000
20/12/2000
Target Name
Indiana Toll Road (US)
Westlink M7 (AU)
Dulles Greenway Toll Road (US)
Dulles Greenway Toll Road (US)
Midland Expressway Ltd (UK)
Mitcham- Frankston Project (AU)
407 International Inc (CAN)
San Diego Expressway (US)
San Diego Expressway (US)
407 International Inc (CAN)
Lusoponte (POR)
Aucat (SP)
407 International Inc (CAN)
Statewide Roads Ltd (AU)
Airport Motorway Group (AU)
Acquirer Name
Cintra/Macquarie Infrastructure
Macquarie Infrastructure Group
Macquarie Infrastructure Group
Macquarie Infrastructure Group
Macquarie Infrastructure Group
Investor Group
Macquarie Infrastructure Group
Macquarie Infrastructure Group
Macquarie Infrastructure Group
Cintra Concesiones de Infr.
Macquarie Infrastructure Group
Abertis Infraestructuras
Macquarie Infrastructure Group
Macquarie Infrastructure Group
Macquarie Infrastructure Group
Stake
Purchase
acquired %
Price EURm
100.0%
5.0%
86.7%
13.3%
25.0%
100.0%
13.9%
82.0%
16.0%
6.0%
5.7%
8.8%
16.1%
50.6%
10.5%
3,040
29
443
70
73
na
443
46
na
126
16
48
350
93
33
4
New generation of potential
investors
Three main types of potential investors
Local
buyers

Local Investment Funds:
– Clear exit strategies within 3 to 6 years.
– Would require IRRs in the range of 12 to 20% depending on the risks
associated to the projected cash-flows.

Local Conglomerates:
– Would normally seek a strong influence position in the Board.
– Would require IRRs ranging from 12 to 20%.
CMB Prime
Celfin Capital
Southern
Cross
IM Trust
Independencia
Consorcio
Copec Group
Quiñenco
Group
Bancard
Solari Group
Three main types of potential investors (cont’d)
International
Infrastructure
funds

Specialized Infrastructure Funds:
– These investors seek assets providing stable, predictable, long-term,
monopoly type, inflation-linked returns
– Their investment profile allows them to avoid focusing on short-tomedium term exit strategies.
– Would normally require IRRs ranging from 11 to 18%.

Long-term Direct Financial Investors:
– Seeking larger investment tickets (usually +US$100 m) in
infrastructure, real estate and infrastructure type of energy assets.
– This category groups Canadian investors that invest pension funds
moneys.
Macquarie
Carlyle
ABN AMRO
GE
Deutsche AM
Ontario
Teachers
Borealis
Brookfield
CPP
KKR
Three main types of potential investors (cont’d)
Other
(strategic)
OHL

Concession operating holdings pursuing a portfolio strategy:

Pursue the opportunity as a way of gaining volume in the regional
concession’s market

Focused on positioning the holding for an IPO in the medium term.
Autostrade/
Costanera
Norte
Acciona
ACS
Abertis
5
Final Remarks –
Infrastructure Industry
Pending Issues
Final Remarks
 Some lessons from the Costanera Norte’s Experience:
– Authorization resolution mechanisms
– Better response time-frame to allow trading of these
shares
– Change of investments rules governing local
insurance companies and AFPs
Chilean Infrastructure Industry
Overview