This week, private toll road developer and operator Transurban announced that it is selling a stake in several Virginia express lanes that it owns to a trio of leading Canadian and Australian pension funds. Australia’s two biggest pension managers AustralianSuper and UniSuper and the Canada Pension Plan Investment Board (CPP Investments) will take a 50% combined interest in Transurban’s Greater Washington Area Express Lanes assets, in a transaction valued at $2.1 billion.
In turn, Transurban will redeploy the capital to invest in new projects in support of government – a reinvestment strategy that has been successfully used to accelerate opportunities across its global portfolio. Transurban’s new partners are globally recognized for their long-term investment in transportation and infrastructure solutions.
Transurban has developed $4 billion of infrastructure in Virginia’s 495, 95 and 395 Express Lanes, which were among the first dynamic, high-occupancy travel lanes delivered in the U.S. Since 2012, Transurban estimates that these lanes have saved seven million drivers a total of 17 million hours of time, generating an estimated $7 billion in economic impact and supporting 46,000 jobs in the Greater Washington D.C. Area.
Transurban will continue to operate the 495, 95 and 395 Express Lanes, per its long-standing partnership with the Commonwealth of Virginia. There will be no change in day-to-day operations of the 67-year concession and no impacts to Express Lanes customers or employees.
“Together with our partners, we are focused on delivering the next generation of transportation infrastructure to move travelers and economies forward,” said Transurban CEO Scott Charlton. “We now have the opportunity to accelerate growth, building on our track record of success in the region and leveraging the time-tested growth strategies being realized across our Australian markets.”
Since the 495 Express Lanes opened in 2012, Transurban’s network in Virginia has quadrupled from 14 miles to 63 miles, including the recent delivery of the 395 Express Lanes, and ongoing construction of the 10-mile 95 Express Lanes Fredericksburg Extension Project.
Transurban is also advancing Express Lanes extensions to relieve congestion and improve travel reliability in and around the American Legion Bridge, and pursuing a bid for Phase 1 of Maryland’s Express Lanes project.
An Opportunity
Transurban notes that, given limited public funding available for [U.S.] infrastructure investment, there is an opportunity to continue to support governments through public-private partnerships or asset recycling mechanisms.
“Transurban has been deeply rooted in the Greater Washington Area for more than a decade. We are a part of the communities we serve every day and are committed to seeing this region prosper,” said Jennifer Aument, President, Transurban North America. “As state and local governments grapple with difficult budget choices amid steep revenue losses, we know more than ever that we must do our part to drive recovery. We continue to be a strong and flexible partner, focused on delivering critical travel corridors and investing in the smart mobility choices customers need to get back on the road.”
While impacts of the covid-19 pandemic led to a reduction in Express Lanes traffic of around 80 percent in April compared to last year, Transurban has seen traffic increase gradually through 2020.
Transurban launched its search for potential co-investors in these lanes in 2019, receiving significant interest across investor groups. All three pension funds in the D.C. area deal are co-investors in several of Transurban’s Australian roads and AustralianSuper and UniSuper are among Transurban Group’s largest equity investors.
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