Transurban $3bn raising tipped in WestConnex toll-road battle

Toll-road giant Transurban may raise up to $3 billion to land a majority stake in Sydney motorway WestConnex.

Toll-road giant Transurban may raise up to $3 billion to land a majority stake in Sydney motorway WestConnex if it gets the green light for the deal tomorrow from the competition regulator, according to Citi.

With Transurban’s share of the transaction likely to cost up to $4.4bn, it is thought the Melbourne-based company will pursue a rights issue close to $3bn compared with the market’s original expectations of a rough 50-50 split between equity and debt. That could place pressure on dividend yield expectations in the 2020 fiscal year, the broker warned.

“Transurban management are committed to holding dividend per share guidance of 59c per share in the 2019 financial year, regardless of the WestConnex outcome,” said Citi, which holds a sell rating on the stock. “However, potentially this transaction could lead to downside to the 2020 consensus dividend yield expectations currently at 5.3 per cent.”

Australian Competition & Consumer Commission chairman Rod Sims will hand down his decision tomorrow on whether a Transurban-led consortium can acquire the toll road after last month asking for more time to review the case.

Transurban runs seven of the state’s nine toll-road concessions and 15 of 19 toll-road concessions in Australia.

The rival bidder for WestConnex is a consortium led by infrastructure heavyweight IFM Investors.

The NSW government is expected to announce a winner soon after the ACCC’s ruling.