ABG.BME - Abengoa

[snailslug]

Spanish headquartered Engineering & Construction firm with a globally diversified business.

 

Focused on constructing

-concentrated solar power plants

-conventional natgas power plants

-electricity transmission and distribution lines (focused on south america)

-water desalination

 

In addition to E&C work, also wins concessions to BOOT (build, operate, own, transfer) the assets for 20-30 year periods. Often can put non-recourse (to Abengoa), project level debt on the assets.

 

Is doing a roadshow for a yieldco IPO that will go out in the next few weeks. Will put some portion of the more mature assets into a dividend paying yieldco, and on a preliminary basis looks like they will price around $2B on assets with a BV of ~$1.5B. Abengoa will retain 70% of the yieldco. Project to pay $150m of dividends in FY2016, if rerated to a 5% yield becomes a $3B market cap for the yieldco.

http://www.bloomberg.com/news/2014-06-02/abengoa-sunedison-spinoffs-show-yieldco-momentum-growing.html

 

Market cap is euro 3.35B

Holding company recourse debt is euro 2.5B

Holding company ebitda is euro ~850m

Concession-like assets have an equity value of euro 3.3B+ (pre yieldco)

 

If you believe the concession-like assets price, then you are paying EV / ebitda of 3X for the holding company with potential further upside if the yieldco gets rerated.

 

Has a lot of moving parts but management has been taking actions in the last 3 years to simplify the company and reduce debt (divestitures, project level financing), and unlock value (yieldco)

 

Anyone looking at this one?

[phil_Buffett]

sounds interesting. on valueinvestorsclub is a write up now. http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/117886

 

thanks snailslug for the idea  :)

[phil_Buffett]

http://www.media-server.com/m/p/tjerebdm