France’s Vinci is close to selling the bulk of its parking-lot division to two French financial firms as Europe’s biggest builder sharpens its focus on higher-growth businesses such as airport concessions.
Vinci said it was in exclusive talks to sell 75 percent of Vinci Park to French private-equity fund Ardian and Credit Agricole’s insurance arm in a deal that would value the division at 1.96 billion euros ($2.7 billion).
That enterprise value is around 16 times Vinci Park’s 2013 operating profit and in line with analysts’ expectations.
Vinci Park operates 1.6 million parking spaces in 14 countries. Although profitable – with an 18.7 percent operating margin last year – it is heavily exposed to the mature, slow-growing French market and to environmental policies discouraging the use of cars.
Vinci is now seeking opportunities in higher-growth and higher-margin concessions such as airports and motorways.
“I see it as a positive development because it illustrates Vinci’s new financial strategy: a little more dynamic, with asset rotation and portfolio streamlining,” said Gregoire Thibault, equity analyst at Natixis.
Shares in Vinci were down 0.6 percent at 1114 GMT. The stock has risen 44 percent in the past 12 months and is up about 9 percent so far this year.
The companies said in a joint statement on Wednesday their goal was to work with current management to increase Vinci Park’s presence in high-growth markets such as North America, Latin America and Asia, while ensuring it remains a leading player in France and other European countries.
Under the planned deal Credit Agricole Assurances and Ardian – formerly known as AXA Private Equity – would each take 37.5 percent of the business via a new holding company, with Vinci retaining 25 percent as expected.
Analysts say the business had about 673 million euros of debt attached to it at the end of 2013. That would put the equity value of the business at around 1.29 billion euros and the sale proceeds for Vinci of 75 percent at around 0.97 billion euros, according to Reuters’ calculations. Analysts expect some of the proceeds may be returned to shareholders.
Vinci reported better-than-expected annual results last week and said the sale of a majority stake in Vinci Park should lift earnings this year.
Chief Executive Xavier Huillard then told reporters Vinci was hoping to become a critical player in airport concessions after it spent 3.1 billion euros on Portuguese airport operator ANA and 365 million last year to raise its stake in French airport group ADP to 8 percent.
Vinci also paid road-building company Colas around 800 million euros last month to become the sole shareholder of motorway operator Cofiroute, which operates 1,100 km (700 miles) of motorways in western France and the A86 road near Paris.
Vinci had publicly confirmed its plans to sell the bulk of Vinci Park in November, after sources told Reuters the company planned to keep a 25 percent stake and expected a valuation of 1.8 billion to 2.3 billion euros.
($1 = 0.7312 euros)
(Additional reporting by Andrew Callus; Editing by Mark Potter and Louise Heavens)Get your FREE trial or subscribe now to Buyouts to find new deal opportunities, super-charge your fundraising efforts and track top managers.