Ann: Transurban Investor Presentation, page-7

I agree this does appear to be very expensive at 26x EV/EBITDA, particularly when there is also income tax to pay of about 27%.

Given TCL's past record of not overpaying for assets, I can only conclude that there must be some very strong strategic reasons and/or a reasonable expectation for strong future growth. Clues pointing to this are spread throughout the announcement presentation:

"a government that embraces innovative transport solutions to tackle the region's congestion problems" ;
"future development opportunities" ; "heavily congested" ; "growing population" ; "opportunities to leverage TCL's expertise in operations, technology and asset management" ; "positioned in a region with extensive experience in public/private partnerships" etc.

TCL's management must be very confident of being able to negotiate widening or extensions of this asset, or even introducing hot lanes as in the Washington area. Given their past performance, I will expect the EV/EBITDA ratio to quickly drop to a more acceptable level. Even just using the likely FY18 EBITDA of 50M would bring the ratio down to around 24x. Add some synergies and further growth and it won't take long to go under 20.

Although I am reasonably comfortable with this acquisition given the likely strategic and growth aspects, I am hoping TCL is not successful with acquiring Westconnex. IMO, that would greatly increase the risk profile.