Allianz leads consortium to win Tank & Rast prize
The wheel is turning full circle for German insurer Allianz, as the consortium headed by its infrastructure arm has won the bidding for motorway services company Tank & Rast from the Guy Hands-led UK private equity company Terra Firma. Allianz sold the company for about a third of the purchase price to the sellers just over ten years ago. The deal is one of the biggest German infrastructure deals ever.
The investment consortium led by Allianz is thought to be paying about €3.5bn for Tank & Rast, according to news agencies Reuters and dpa. (We had reported this figure several times as being the asking price, once it was clear that the original plan of a strock market listing was no longer seen as feasible). The investing consortium consists of Allianz Capital Partners, Borealis Infrastructure Management, Infinity Investments (a wholly-owned subsidiary of the Abu Dhabi Investment Authority) and MEAG, the asset manager of insurer Munich Re.
Borealis Infrastructure is backed by the Ontario Municipal Employee Retirement System ("OMERS"), one of the largest pension funds in Canada with 450,000 members and $72.0bn in net assets.
Those losing out in the bidding process include the giant China Investment Corp and a consortium led by the infrastructure arm of Australia's Macquarie Capital and including Italian autostrada concessionaire Atlantia, who had both submitted binding bids before last week's deadline. The Chinese consortium were thought by observers to be moving into the role of favourite recently, and their bid is unlikely to have fallen much short of that of the winning consortium.
The new buyer consortium described themselves as like-minded investors "pursuing a strategy of generating stable and predictable returns over the long run". In a joint news release they said: “As market leader in Germany, Tank & Rast is an attractive investment for all of us due to its long-term and stable investment characteristics and its stable regulatory and contractual environment.”
The Tank & Rast chain has 390 autobahn service areas, 350 petrol stations and 50 hotels, making it the largest service provider of its type in Germany, serving 500 million visitors a year. The group employs 600 directly, including 300 in its Bonn headquarters, and over 12,000 through its numerous franchise partners, in generating more than €3bn in annual revenues.
Terra Firma bought Tank & Rast in 2004 for €1.1bn from Lufthansa and two funds belonging to Apax and Allianz, six years after being privatised by the German government. In 2007 the private equity group attempted to sell the chain, and ended up selling just below 50% to Deutsche Bank’s alternative investments subsidiary RREEF.
In a news release, Mr. Hands said, “Since purchasing Tank & Rast in 2004, it has proved to be a very successful investment. Terra Firma returned more than five times the original investment to our investors in 2007, and the sale of its remaining stake will increase that multiple further.”
The winning consortium has put together €1.45bn of loans to back the acquisition, according to various sources. Among those providing finance are BNP Paribas, Bank of America Merrill Lynch, Morgan Stanley, Credit Agricole, Mediobanca, RBC, RBS, Scotiabank and UniCredit.
The financing includes €1.4 billion of term loans, a portion of which could be syndicated to other lenders. There is also around €50 million of undrawn facilities. Some €460 million of high yield bonds will remain in place, due to non-call provisions, as will €274 million of payment-in-kind notes, the sources said.