The first comment I would make is that the Investor Presentation looks very poor and vague as far as actual economic details are concerned (e.g. acquisition multiple paid, forecast revenues, expected IRR, etc.).
So much so, in fact, that I am not finding it straightforward to build a satisfactory financial model of the transaction, for the very purpose of deciding whether or not I want to take up my own entitlements.
That, by itself, is not a very good start, in my opinion.
Anyway, from a first rough modelling, I am under the impression that the expected IRR of the Westconnex deal is significantly lower than the one of the current Transurban Group asset portfolio.
As a first indication, I see an IRR of 6.25%-6.75% pa for the Westconnex, vis-a-vis 8.00%-8.50% for the existing portfolio; while the expected IRR of the Westconnex is indeed higher than TCL’s WACC, the fact that it is lower than the one of the existing concessions is not something I would personally describe as being “value-accretive” [*].
I will post some more detailed considerations on the topic during the weekend.
Cheers
[*]: Incidentally, saying that the EV/EBITDA multiple paid is “broadly in line with recent transactions”, while taking as a reference a discounted FY28 EBITDA, looks like a bit of a joke to me. Anyway, depending on the discount rate chosen, I see the multiple paid as being in the low-to-mid 30s (hence not quite “in line”, really).
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