The M6 Toll motorway was put up for sale yesterday for £1.9 billion. This figure surprised many in the industry, especially considering the road’s chequered history.
For the owners, the M6 toll has taken its toll. The road is currently owned by a consortium of 27 banks that are looking to recover the road’s staggering £1.9 billion debt. The consortium took control of the road from infrastructure firm Macquarie in December 2013.
With the UK’s only toll road being for sale, we decided to take a look at the value of the investment and ultimately when the investors could expect to make their money back.
Weighing up what you get for £2 billion
The 27 banks that own the road have decided to sell the toll road as they think that the asset value is at it’s highest. 40 years remain on its 50 year contract for running the toll. The number of people using the road is the highest it’s ever been, so this does make sense.
According to the Financial Times, the EBITDA of the M6 Toll was £63m in 2014. In simple terms this figure is the annual earnings of the toll before tax, depreciation and amortisation.
At that figure the investors could expect to make their investment back in 31 years at present market conditions. Yes that’s 31 years!
This is despite the average daily vehicles exceeding 47,000 and the annual yearly vehicles standing at 17,360,038. Of the vehicles, car drivers are charged £5.50 to use the road during the week and HGVs £11.
While the toll has been making on average a £25 million annual loss, the latest accounts may suggest that this is about to change. So the question remains; would you invest in such a monster?