Túnel d’Envalira

THE HIGHEST TUNNEL IN EUROPE - 2,879 METERS LONG

We worked efficiently under pressure, in order to provide the right answers in time for our investors, and developed a robust commercialization plan to secure the acquisition.

Juan Horno - Director Infrastructure

A: Opportunity / Challenge

The Túnel d’Envalira is located in the Pyrenees mountains of Andorra and enables its users to avoid the potentially dangerous Envalira Pass, one of the highest mountain roads in Europe. It provides stress-free access to the popular Pas de la Casa ski resort in the Grandvalira region of France, which is the largest and highest skiable domain in the Pyrenees. It enjoys an enviable snow record, a southern latitude and sunny skies. Its ease-of-access from airports in Barcelona and Toulouse attracts large and growing numbers of winter sports enthusiasts from France, Spain and the UK.

A fifty-year operating concession for the toll tunnel was granted in 2002 and extends to 2048. It includes both the maintenance and operations of the 2.9 km tunnel as well as 1 km of the roadway connections. The tunnel is located at an altitude of 2000 meters and is 3 kilometers long. It is amongst the highest road tunnels in Europe.

We sourced the opportunity to acquire this tunnel and its adjacent motorway from the majority shareholders. Two minority shareholders subsequently committed to accept the agreed-upon purchase price.

B: Project / Operations

We managed the refinancing of the project at the moment of acquisition, instead of having to wait until 2021, so that aspect of the investment was applied in the purchase price. Once the acquisition had taken place we were then able to create another (SPV) company in Andorra.

Once debt was closed and the Equity SPV was created, the purchase of the SPV that owns the concession was completed. Not only did NdG close the deal but we were also able to take full control of the management of the project through to maturity.

C: Results / Outcome

The underwriting and acquisition of Túnel d’Envalira, required us to work efficiently under pressure, in order to provide the right answers in time for our investors and secure the acquisition. However, neither of the issues involved were new to us and were promptly solved, especially those regarding the due diligence process.

We successfully acquired the project by proposing to increase income through revenue management and improving commercialization efforts by closing deals with third party operators such as ski resorts and hotels. Once our commercialization plan is executed we expect to present our investors with an even higher IRR than originally projected.