Financial services giant Citigroup and Spain's Abertis Infraestructuras have won a bidding war to run the Pennsylvania Turnpike, a major U.S. tollroad, with a bid of $12.8 billion dollars, officials said Monday. Citigroup and Abertis bested a rival $12.1 billion bid for the project mounted by another investor group led by Goldman Sachs to take over the management of the 531-mile road system, said Pennsylvania Governor Edward Rendell.
The deal requires the approval of the Pennsylvania state legislature. State spokesman Chuck Ardo said it was hoped that the legislature would approve the deal "as soon as possible."
Rendell said in a statement that Citigroup and Abertis would take over the management and operation of the Pennyslvania Turnpike through a 75-year lease. The companies would pocket revenues from managing the highway by charging vehicle drivers a fee to use the road.
Large finance firms are seeking lucrative investments outside the U.S. housing sector, which is suffering one of its worst downturns in decades. Some analysts believe that big infrastructure projects could yield solid income for savvy investors in coming years. Global Infrastructure Partners, which was set up by Credit Suisse and General Electric, said last week that it had raised a war chest of $5.64 billion to invest in large infrastructure projects around the world.
Citigroup and Abertis, which is based in Barcelona, Spain, have agreed to invest $5.5 billion in repairing and upgrading the Pennsylvania Turnpike and will have to meet certain management standards imposed by the state. Officials said the companies would have to abide by limited toll increases already proposed by the state.
The state has proposed a 25% hike in the highway's tolls in 2009 followed by 2.5%, or inflation-linked, increases in following years. A daily average of 447,441 cars used the highway during 2005, according to state figures.
Rendell, a Democrat, said Pennsylvania would use the billions of dollars raised from leasing the highway to repair and upgrade roads and bridges across the state.
Abertis operates interests in Atlanta International Airport and Burbank Airport in the United States.
Copyright 2008 Agence France-Presse