Since 2011, Enagás has been looking for opportunities in other countries. The reason is none other than to grow when the Spanish market is already mature and without clear investment opportunities. This intensive tracking has paid off: a week ago Enagás announced its arrival in the US through an agreement with subsidiaries of the venture capital giant Blackstone Infrastructure Partners and GIC (sovereign fund of Singapore) to invest 590 million dollars in an indirect participation of the 10.93% on the Tallgrass Energy LP (TGE) gas company. An operation that will provide 60 million euros of annual average dividend until 2023 to the Spanish firm.
The president of Enagás, Antonio Llardén, explains that the Tallgrass operation involves entering "the market with the greatest growth opportunities in the world" for midstream infrastructures (transport). "The USA is one of the countries in which we have been analyzing opportunities for some time and this fits. In addition, our partners have recognized the key role of Enagás as an industrial ally ".
This is the largest investment that Enagás has made in infrastructures already built, which in the jargon of the sector is called brownfield. "By the end of 2019, including this operation, we will have invested 2,200 million euros in brownfield projects since we began our internationalization in 2011. In greenfield [proyectos que hay que construir] We have another large operation, which is participation in the Trans Adriatic Pipeline, TAP. It is a gas pipeline that passes through Albania, Greece and Italy and its construction is already at a level of progress of more than 85%, "says the president of Enagás.
Following the announcement of the entry into the capital of Tallgrass, the risk rating firm S & P lowered Enagás 'solvency rating, arguing that "Enagás' commercial and financial profiles will be weakened" as a result of the acquisition. Llardén, however, points out this worsening of the rating: "S & P continues to qualify Enagás very solvent, with BBB + with a stable outlook, and has maintained the best business risk profile possible, Excellent. For its part, Fitch has maintained the A- rating with a stable outlook. The two agencies have confirmed the company's high credit quality. "
In Renta 4 they believe that in 2023 the investees will contribute 40% of the group's profit
An important part of the operation in the US has been the financing of the operation. Thus, the stake of Enagás in Tallgrass is indirect, through a holding company that holds Blackstone as the majority shareholder, GIC as a minority shareholder, and to which Enagás has incorporated 24.9%. This group had already closed a loan of 1,100 million dollars without requesting funds for shareholders. And in addition, the subsidiary Enagás Internacional obtained another loan of 460 million dollars with two banks.
Íñigo Isardo, analyst at Link Securities, points out that this investment allows Enagás "to enter a stable and growing market", and highlights that the Spanish group has a portfolio of "very interesting" projects in which its management experience, development and maintenance of gas infrastructure "is very well valued". Blackstone and GIC are more financial profile investors than management, so this analyst believes that they complement each other well. In addition, Enagás' stake, close to 25% in the holding, gives it a position on the board of directors, "which would allow the company to be heard in the strategic decision making of the joint project," Isardo recalls.
On the other hand, Ángel Pérez, of Renta 4, explains that Enagás is always looking for investments with double-digit profitability and this operation gives it opportunities for growth, stability and cash generation. "It is foreseen that in 2023 the investees contribute 40% of the group's net profit, which gives a lot of stability to their dividend policy, with growth of 5% until 2020 and at least 1% per year until 2023. It should also be noted your bets for biomethane and hydrogen, "says Pérez.
Investors often identify energy infrastructure managers such as Enagás with safe values, with behavior on the stock market similar to that of public debt given its stable cash generation. However, this type of company also generates uncertainties, which arise not only from the evolution of the price of raw materials, but above all from political decisions. In this sense, Isardo remembers that, although Enagás always defines parameters of profitability of investments, "gas pipelines and gas systems are usually subject to political power", as has been seen in the arbitration conflict that maintains with the Peruvian Government in relation to the execution of the South Peruvian Gas Pipeline (GSP). Another of the risks that they plan on the company, according to this analyst, is the stagnation of some infrastructure that it has in its portfolio, "such as the interconnection with France, which has slowed down due to the change of opinion of the competition regulatory bodies on its need. "
The president of Enagás explains that in Peru also participate in TGP, a very important infrastructure for the country "and that is working very well". "In another project," adds Llardén, "we are in an arbitration process before Ciadi [institución del Banco Mundial], that I trust is solved well. With France we have two interconnections. A third, Step, is being promoted from Europe, from which the Spanish and French regulators have verified that there are some pending issues to be solved. We will have to see how it evolves, and we will be what the regulators and governments indicate ".
Enagás is, together with Bankia, Aena, Indra and Ebro Foods, one of the few remaining companies in the Spanish stock market with the presence of the State through Sepi. A public shareholder who looks favorably on its president, Antonio Llardén: "To have an institutional shareholder like this with 5%, in a company with 95% free float [capital libre en el mercado]It is a good reference, and in operations such as the US it has been very important because it has allowed this operation to be analyzed from all possible perspectives. This, as president, gives me a lot of comfort, "he says.