It does not seem that the Government of Pedro Sánchez was prepared for one of his Ibex to choose to locate its headquarters outside of Spain. Ferrovial’s incomprehensible “gesture”, according to Nadia Calviño, is a jug of cold water and comes after a complicated relationship between an Executive who has added several attacks against businessmen. From the criticism of Amancio Ortega, the most recent of Juan Roig, to even the president’s own words, when pointing out, regarding the new extraordinary taxes on banking and energy, that if Mrs. Botín and Mr. Galán they complained is that things were being done well.
Ferrovial will be an isolated case or we will see others, for the group this modification will mean being closer to its target markets; which for him are where both his investors are, as well as his assets and his ultimate goal of listing in the United States.
Spain, although its origin, would already represent less than 15% of the value of the assets and barely 7% of its investor base. The United States, where Ferrovial locates more than 50% of its assets, has a greater weight in capital. In total, 29% of its investors are domiciled in North America. And the internationalization of its shareholders is broader with 40% of the titles in the hands of non-Spanish Europeans and the remaining 20% controlled by investors from the rest of the world.
Ferrovial would like to be listed in the US stock indices, where it sees growth potential
The international jump in listing would be a tool to gain visibility -which is normally related to the possibility of gaining value and capitalization-, increase its ability to obtain resources and begin to compete in another league on the stock market; because, let’s face it, our Ibex 35 is a small index if you look at the world and the amount of index funds that are made on it is minimal.
“The fact that we have ordinary shares also allows for a possible inclusion in the future in the US indices,” Ernesto López Mozo, Ferrovial’s general economic-financial director, explained to analysts on Tuesday. And the group believes that this is where its future growth is. “We have attractive investment opportunities ahead of us, focused on our main market, which is now the US”: that’s how categorical Rafael del Pino was before investment banking.
The president of Ferrovial knows that for years analysts have linked the value of his company in a very important way (he and his family control 35%) to the assets in North America. Even today they calculate that the 407 ETR highway in Toronto (Canada) represents 40% of Ferrovial’s ‘enterprise value’ (EV) (which, by the way, was the main topic of discussion with analysts after presenting results and the change in corporate structure). . And the EV concept is especially critical in your business.
With interest rates and inflation rising, Ferrovial seems confident that it will be able to finance future projects in the United States better from there or with the AAA rating enjoyed by the Netherlands than from Spain. In businesses like yours, it is very common to leverage projects and concessions and avoid having the debt computed on the parent company, which would acquire a debt that is difficult to digest. And the rise in financial costs that we are seeing at a global level -which is also putting a lot of pressure on Spanish debt- is a handicap for this business model and Ferrovial wants to save its rating.
The triple listing that it proposes -Spain/The Netherlands (Euronext)/United States-, although it will entail more costs for the company, is more attractive to investors, who are paying an extra surcharge right now for Spanish shares. Ferrovial, which is worth more than 1,000 million, is one of the companies that are affected by the ‘Tobin Tax’, which the Ministry of Finance has applied since 2021.
Avoiding this tax, increasing the base of investors and financiers, a 500 million share repurchase plan that would be amortized after the change in corporate structure or the repurchase of a hybrid bond… are some of the hooks that Ferrovial has thrown at shareholders to support the change of registered office at the meeting as a step prior to multiquotation.
What the group is clear about is that they will not do it ‘las bravas’. If 2.63% of the capital opposes the change of passport of the registered office, this would remain in a project (the company offers to ‘compensate’ with 26 euros per share to shareholders who reject the change with a cap of 500 million ). And it is not an excessively high capital figure that ensures that there can be no surprise and the proposal cannot go ahead. In fact, at the 2022 meeting, Ferrovial shareholders voted 25 points and in five of them the number of positions against exceeded the barrier.
With 7% of the capital in Spain, there is still a game or, if not, time to build a sufficient participation. After Indra last year we already know that anything is possible in a meeting.
