INTERVIEW - Hochtief says it has funding for concessions

BRUSSELS (Reuters) - Hochtief has funding to meet payments by its concession unit and faces no immediate need to come back to the equity markets following its cancelled listing last year, a company executive said.

"We are under no pressure to return," Reiner Schrankler, head of Hochtief's airport unit and an executive board member of its concessions division told Reuters on the sidelines of the Projects & Infrastructure International conference in Brussels.

Germany's largest builder planned to raise up to 1 billion euros by selling new and existing shares and floating 49 percent of the unit, which comprises mainly participations in airport concessions, but also roads and social infrastructure projects.

But in December Hochtief pulled what would have been Germany's largest initial public offering (IPO) in more than two years, blaming the financial crisis in Dubai for the lack of enough investor interest in the stock.

Schrankler said it already had the funding available to pay a second instalment of 200 million euros for Budapest Airport as well as the capital to fund its equity commitments of up to 400 million euros in a pipeline of projects.

"The rumours that we have been looking to sell a stake in the concessions unit privately to infrastructure funds are not true. We welcome financial investors onboard but as co-investors in our projects," Schrankler said.

Developers have been looking to recycle their equity in concessions and public-private partnerships by attracting financial investors. Last month, Spain's Ferrovial made an open call to investors to join its projects.

Three major projects that Hochtief is interested in, the airports of Lisbon, Prague and Crete, will not be reaching financial close in 2010, further relieving pressure for Hochtief to obtain new funding, Schrankler said.

India is high on Hochtief's list for new investments but China was not, as the company had to focus its resources, Schrankler said, adding that there were also major opportunities in the North American infrastructure market.

ICY IPO WINTER

"We deserved to be icebreakers for the European IPO market, but this was an icy winter and we got stuck as well," Schrankler told the conference earlier on Thursday.

Schrankler said the concessions IPO was an effort to seek financing alternatives to scarcer and more expensive debt as the days of deals of ten times debt to earnings before interest, tax, depreciation and amortisation have come to an end.

"We could not beat the equity capital market but we would not allow it to beat us either. We would not allow a 30 percent plus discount, we had the flexibility to say no," Schrankler said.

Schrankler said markets have no problem with valuing operational infrastructure assets but that incomplete and untested projects were more challenging. Investors understand how Hochtief manages its minority stakes in assets, he added.

"What we got a little bit wrong in our analysis was that the market does not value assets during construction, it gives you zero value for that," he said.

Budapest Airport is currently ramping up operations but faces multiple uncertainties, although it has made progress in signing up airlines for routes and progressing with construction and permits, Schrankler said.

"In one instance we did a refinancing for cash distribution but we will not be doing this anymore and this gives comfort to the market," Schrankler said.