Information on the Target
Horizon and RiverRock have successfully acquired an 89.2% stake in Euroscut Azores, a strategically important shadow toll road located on São Miguel Island in the Azores, Portugal. Horizon Equity Partners, through its Follow-On Fund, obtained a 65% stake, while RiverRock secured a 35% stake in the venture. This acquisition was finalized after meeting all contractual conditions set in June 2023.
Euroscut Azores operates a 93-kilometre motorway that has been functioning since its construction in 2011. The concession agreement for the road runs until 2036, marking it as one of the largest infrastructure projects established in the Azores. The toll revenues generated from this road utilize a shadow-toll model, whereby the concessionaire invoices the Autonomous Region of Azores, with revenues adjusted according to inflation rates.
Industry Overview in Portugal
The infrastructure sector in Portugal has experienced significant advancements, with both the public and private sectors investing heavily in the development of transport networks. The government has prioritized infrastructure growth to enhance economic connectivity and stimulate regional development, especially in island regions like the Azores.
Portugal’s focus on developing its transport infrastructure has catalyzed a shift towards public-private partnerships (PPPs), which have become a key mechanism for financing major projects, including toll roads and bridges. These collaborations leverage private investment to improve public assets, ensuring sustainability and operational efficiency.
In recent years, the shadow toll model has gained traction. This approach allows private investors to fund infrastructure projects while receiving revenue linked to the usage of the road, making it an attractive proposition for investors, particularly in regions with lower traffic volumes like the Azores.
This industry growth is bolstered by Portugal's geographical position and its ongoing efforts to integrate more sustainable and resilient transportation solutions, presenting opportunities for further investment in the infrastructure sector.
Access Full Deal Insights
You’re viewing a public preview of this deal. To unlock full access to ca. 50,000 other deals in our database and join ca. 400 M&A professionals who are using it daily, sign up for Dealert.
The Rationale Behind the Deal
Moreover, the shadow-toll mechanism used by Euroscut ensures a continued revenue stream tied to government budgets, providing financial predictability for the investors while supporting essential regional connectivity.
Information About the Investor
Horizon Equity Partners, established in 2017, focuses on infrastructure investments and has pledged to invest over €150 million across energy transition, social services, telecommunications, and transportation assets. Previously, Horizon has invested in the Azores, maintaining a presence through its involvement in the consortium responsible for the Hospital do Santo Espírito da Ilha Terceira.
RiverRock, through its Brownfield Infrastructure Fund launched in late 2018, manages a portfolio worth about €200 million, specializing in operational infrastructure projects primarily within social services and transportation. With prior investments in Portugal, including a minority stake in the Pinhal Interior shadow toll road, RiverRock demonstrates a commitment to enhancing the region's infrastructure landscape.
View of Dealert
From an expert perspective, this deal appears to be a robust investment opportunity for both Horizon and RiverRock, positioning them strategically within a growing sector. The acquisition of Euroscut Azores not only diversifies their portfolios but also allows them to capitalize on regional performance tied to tourism and local economic growth.
The shadow toll model offers a unique advantage; it minimizes traffic risk by ensuring payments are made by the government rather than users directly. This lessens the volatility commonly associated with toll road revenues, thereby enhancing predictability for investors.
Furthermore, the long-term concession period until 2036 provides a significant runway for return generation, and the projected economic resilience of the Azores adds to the attractiveness of this investment. Given the strategic alignment between Horizon and RiverRock's broader investment goals and the unique dynamics of the Azorean market, it is likely that this deal will prove to be beneficial in the long term.
Similar Deals
Horizon Equity Partners and RiverRock
invested in
Euroscut Azores
in 2024
in a Buyout deal
Disclosed details
Equity Value: $150M