Deal in Focus: Allianz et al. buy Tank & Rast from Terra Firma

Allianz Capital Partners has led a consortium of investors to acquire German motorway services operator Autobahn Tank & Rast (T&R), 10 years after selling the business to Terra Firma.

Enterprise value for Tank & Rast has not yet been disclosed, but press reports place it around the €3.5bn mark. Should it be confirmed, the figure would represent a threefold increase on the price Terra Firma paid 10 years ago. According to unquote data", Tank & Rast is the largest German buyout recorded in almost 10 years.

The consortium of acquirers was led by Allianz Capital Partners, the German insurer's private equity arm, and includes co-investors Borealis Infrastructure Management, Abu Dhabi Investment Authority's Infinity Investments and MEAG.

The sale was conducted via a bidding process with four potential buyers, including Australian investor Macquarie and Italian concessionaire Atlantia. Chinese state fund CIC went head to head with the Allianz consortium in the final round, but lost out with a marginally lower offer. Industry rumours suggest that the Chinese offer was almost as high as the Allianz offer but that Tank & Rast considered the German investor more capable of leading the company.

Chinese investors have recently shown an increasing appetite for assets in the European market. The latest example was the Swissport buyout by HNA Group, the owner of Hainan airlines. The Chinese company bought the passenger and cargo-handling aviation service for CHF 2.7bn.

Bonn-headquartered Tank & Rast operates service areas across Germany's motorways. The business currently manages 350 petrol stations and approximately 390 service areas in the country, 50 of the latter being hotels. In 2014, the business generated €506m in turnover and an EBITDA of €236m.

Back at the helm
The sale marks Allianz's return as Tank & Rast's shareholder more than 10 years after it divested its stake to Terra Firma alongside fellow shareholders Apax Partners and Lufthansa. The €1.035bn SBO, announced in January 2005, saw Terra Firma deploy around €350m via its €2bn second fund. The transaction put an end to Tank & Rast's IPO plans at the time.

The company was then backed by Terra Firma as it undertook a first refinancing via a hybrid infrastructure loan in 2006, followed by additional restructurings in 2007 and 2013 – the latter understood to amount to €2.1bn in debt.

In 2007, Terra Firma offloaded a 50% shareholding alongside fellow owners to Deutsche Asset & Wealth Management, Deutsche Bank's investment arm. According to the GP, the partial sale generated a 5x return, with the final exit upping this multiple further. At that time, Tank & Rast was valued at €2bn.

Tank & Rast stated that it has invested €1bn since 1998, when it was first privatised. The chain underwent a modernisation process in recent years, introducing pay-for toilet operator Sanifair. The food service side of the business was strengthened through partnerships with chains like McDonald's and Lavazza.

Despite those efforts, Tank & Rast lost €116m in 2013. With a turnover of €481m in 2013, the company also pays annual interest charges that amount to almost half of its revenues.

But it is often not the high profit margin that makes infrastructure investments attractive, with long-running government contracts promising steady profits. Tank & Rast's agreement with the German road administration will last until 2038 and contains the option for two extensions.

Allianz stated it plans a long-term involvement with the operator of service areas, aiming for steady returns and allowing enough time to increase the profit margin. 

Tank & Rast will now target growth across its network via the launch of new service areas, the improvement of its existing facilities and the development of new product ranges and partnerships. It will also increase the number of its off-motorway service areas.

Awaiting approval from the German regulator, the transaction is expected to be finalised during the second half of 2015.

People
Allianz Capital Partners – Christian Fingerle
Borealis Infrastructure Management – Michael Rolland
MEAG – Holgen Kerzel

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