French target City for toll-roads float

BOSSES of Autoroutes du Sud de la France, owner of the annual migratory highway to the Med for holidaying Britons, are heading for London to market the merits of France's last pre-election privatisation.

The first flotation of a French toll road company, with a target valuation of up to e5.75bn (£3.5bn), is reported to be stirring interest among City investors. 'The warm-ups went very well,' said ASF's Bernard Gardelle. Several brokers, including JP Morgan, have recently extended coverage to the toll-road sector.

There is a e1-per-share discount for individuals, but to qualify investors must be French residents - which rules out half a million British holiday home owners.

ASF owns 36% of France's 5,000-mile toll road network, concentrated south of a line between Brittany and Menton on the Italian border. It is the fastest-growing section of the network, with vehicles per kilometre rising by more than 5% a year due to the economic rise of Italy and Spain and growth in the southern French economy.

Typical tolls for a 566 kilometre run from Toulouse to Nice are e36.70, and the company's-2,794 kilometres of completed roads, including subsidiary Escota, is almost a licence to print money.

Last year revenues were e1.92bn, ahead 2.3%, generating e754m of operating profit, even after a e114m hit arising from the imposition of VAT, which the road operators were not allowed to pass on to customers. But net profits, at e218m, exceed those of the other five publicly-owned toll road operators combined.

The French government, advised by HSBC-CCF, is selling shares equivalent to 49% of the capital, after its enlargement by new equity worth e800m to pay down debt. The new cash will leave ASF with debts of some e7.5bn, equivalent to gearing of 270%. The IPO is being rushed through ahead of next month's French Presidential election, to swell State funds by up to e1.9bn.

The open offer is backed by a global placing, jointly coordinated by HSBC and the company's adviser, Clinvest Crédit Lyonnais, at an indicative price range of e22 to e22.5 per share. Executive chairman Bernard Val and finance director Alain Renoir will be in London next week to sell the company's merits to City brokers and institutional investors.