Welcome to VINCI Conference Call. I will now hand over to Mr. Greg Octivo. Sir, please go ahead.
Good morning, everybody. We hope you had a wonderful Christmas. Many of you are probably on holidays, and we know that's a special period of the year. So thank you very much for joining our call regarding the Gateway Airport acquisition. You have received this morning our press release along with the presentation of the deal.
The ID of this 1 hour call is to give you some colors and this interesting and exciting transaction. To answer your question, we have Christian Aderi, CFO of Vancy, and in London, Nicolas Nudar, CEO of Vancy Concession as Olivier Matcher, Deputy CEO of Vancy Concession. We'll start with a brief presentation by Christian Adairey and Nicolas then we'll have a Q and A. I'll now hand over to Christian.
Good morning, everybody. We'll be brief in order to have more time for the Q And A. We just signed an agreement with the shareholders of Gatwick, represented by GIP, after direct negotiations with them to acquire a controlling stake of 50% plus in this best in class airport. The transaction should be closed by theendofJune19, but we wanted to share a few information with you right away. Before Nicolas highlights the key takeaways of the asset and of the deal, let me emphasize the investment rationale of search an acquisition for VINCI and how it is perfectly in line with our strategy as you can see it on slide 8 of the slide presentation.
First of all, this is a freehold asset. And as you know, extending the maturity Overse Ecosystem portfolio is one of our main challenge. Then a major step in terms of VINCI's international footprint Such a move, VINCI Airport reinforces its position of leading airports operator to the most diversified portfolio of assets worldwide. HCI Airports enter the world's biggest air market, the London area. The price paid was directly negotiated between VINCI and the shareholders represented by GIP.
Consider that it is reasonable meets our investment and capital discipline criteria. The deal will be rapidly accretive on VINCI profit per share. Finally, and that's key in our philosophy of cash allocation In the frame of a clear governance with GIP, we will have the control, and we will consolidate this asset. I now hand over to Nicolas.
Thank you, Christian. So for all
of you, for us, it's great news for Vansy and Vansyakos to add this outstanding asset to our portfolio, which you well know, it's right possibly in slide 4. You have all the other details of the figures in the other slides. We think it's outstanding first because it's a freehold, which means in our words, perfect for no limit of time, it's a perpetual property regime. And even if we had the smaller part of the graph, it's quite new for us to have such a a big asset in our concession portfolio for unlimited time. Secondly, it starts turning with because it's a very big airport more than 46,000,000 passenger in the last 12 months.
The sale in UK, the 8th in Europe, it would become the biggest reports in the value of our portfolio until now, which was leased by and we can buy a little bit less than 30,000,000. And as you know, it's located in in UK, but it's a premium and welfare region of London and London market, the biggest in the world in terms of Metropolis, is congested. So it's also a very resilient airport, very robust traffic because there is not much alternative to grow. It's also outstanding on the operating point of view. It is a very efficient probably the most efficient in the world in terms of management of passenger and lithium flows with a single runway and we are very much interested with the synergies it can provide, for our network of Airports.
Probably, we would get the benefit of this knowledge in all our reports, in the world, we could also provide some commercial support to Gatwick in order to rise the commercial revenues. Regarding the regulation, and that's another key point have in mind that it's not a rap based regulation, but the life and lead regulation based on bilateral agreements with our life very, very, supported airlines. As you know, the biggest airlines in Gatwick is easyJet that we know very well from our Portuguese, Belfast and Leon not experience. So it's a very solid partner, also British Airways, which is growing a lot as early new long haulers and bigger aircraft in Gatwick. So it makes that with beef type of contracts and agreements It makes it flexible, pragmatic business, mining focus on the overall passenger and airline satisfaction to for the new deal.
And finally, not last and at least, the price will pay of £2,900,000,000 for 50% straight, implied an enterprise value below 20 tank EBITDA think it's very reasonable if you remember, for instance, London City, but also the French regionals 2 years ago, for a short Italian in the case of the French regionals, 25,000,000 years. We get a very low multiple for unlimited time in a very rich city of the world. We think it's a fantastic opportunity and the price is very reasonable for such a great asset considering the recent transaction. We see an upside particularly in the retail parts the ones of you, you know, Gatwick. And we see a very good optimization process to get a good aircraft.
The traffic is growing and we are very, consultable with all the rational. So we are very excited about it. It's a very efficient effort, very big. There's still room for capacity to increase the regulation in light of it and raise a potential upside in the commercial base. And for, again, a very reasonable price between 2019 and terms of financial data.
We are here to now answer any of your questions about the deal.
Questions. We have a first question from Stephanie Tate from Royal Bank of Canada.
Good morning, and thank you for, that time and answering my questions. And, Chris, it's a good one. My first question is on it and the risk that you present, please, give you the best insight on how you think about it. And, obviously, it's a very long term acquisition with a 30 20, services on my question, timing and, how you, value that risk. Secondly, on, VIP, which will remain obviously an important shareholder, Could you please let us know what their long term best, keeping is around the asset and, how long they are locked for or not, then if you could increase your stake eventually in Gatwick.
And, and then thirdly on, the regulatory backdrop. So there's no rush that could do maybe give us a bit more details on long term virus, thinking, etcetera, especially given you said that the airport was already very efficiently managed. How you think about the equation there.
Okay. So can you hear me? Okay. So, Niko, Nicolas speaking. First about Brexit, the good thing for us is that we made all our assumptions with all the last figures of any, bodies in the world about the potential British GDP evolution in the future.
But as you know, Gatwick is a fifty-fifty airport. So you have one effect which is the inbound traffic from the rest of the world, where if the pound, for instance, goes down at It provides a lot more choice to the British zone and possibly the London system. And on the other side, we took assumptions which are reasonable about British GDP and the prevention for the currency. Probably, it allows us to have such a reasonable price because we are at the moment. Our product is very less competition that could begin at over a moment.
And as we took this very reasonable assumption to activity and therefore traffic, it provides a reasonable duty and so a reasonable price for our acquisition. Nobody knows afterwards what things have moved. And as I told, the London Airport system as a capacity crunch is very congested, which makes that even the monarch failure last year provided a rush to the slots of Gatwick immediately. At this time, naturally, the Brexit was known and even with this, figure, the slots were immediately related and the traffic was up not only last year, but also this year. So even if, nobody knows exactly in every of the next month what's going to happen, we think the traffic of Gatwick is very robust and resilient as it has proved in the last years.
And what we see in the potential of flight and make sure is very appealing on this reason. The VIP has the relation in communicate they are going to, really syndicate 49.99 percent,
which is also
a very good signal to us because they don't believe they will be manage half of the equity in the future. They reinvest, which is a good signal that, they will combined all our support and continuity with what was done in the past 10 years. There is a full continuity of the management with us. And so we think it's a good signal that they reinvest with us in the next 6 months, probably with some new entities But for the details, they are not known today. And I am advised you to discuss with them later on when they have their new entries.
Regulatory, good thing about the valuation is that the price is the charges they can get with are quite low, quite reasonable, you know, very different from Heathrow. So Heathrow has high charges and regulated asset base. The fact of today is that the British regulator, moved to a more passenger experience and passenger satisfaction orientation. And so as far as we have agreements with the airlines, which is the case with Easyjet, British Airways, and all the major airlines of the airport, it doesn't have for a strong regulatory framework. And it made, we made reasonable assumptions for the future as we have a limited freehold.
But again, that's the existing price is very low and not challenged. We think, even, with a very reasonable assumptions for the future, it is not a very difficult and mature for us to consider. So again, it's not BAR based. It is soft management of the constraints and it's based on agreements where we have availability already until 2026. Are the actors of the system, which we might naturally want more resilience and operational efficiency across all of them for any disruption in Gatwick is higher than discussing some details of the pricing of the charges, which is what they give priority the satisfaction of passengers and operational excellence to the former and the past half regulation.
It is percent of the British regulation with the CAK, and this is also what is required by the major airlines. Because they would suffer more from disruption than from any price difference in the future.
And maybe just to re hang up on the phone that it's already very efficiently managed.
Do you still see
some room for, a lot of value creation based on even better management of the aircraft?
I would say we see a room of value duration in our price with our BP in any case. But for the ones who do a little bit the asset, I would say probably very more margin on the commercial side particularly in the duty free, the duty paid, then on the operational side, the operations are quite well managed in order to maximize the number of passenger flights and the number of movements. Probably the settings of the commercial offers within the airports are not perfect, and we think with our knowledge and working with the teams of network, we can provide better, proposals for our customers and it will arrive probably a little bit, the yield to spend that back our future in the future. Naturally, technically operationally, we exchange our plans with opportunity and management, and we are working in continuity both on CapEx and optimization of OpEx. And so value pressure lays in our price, but also in the possibility to upside a little bit, commercial activity.
The next question comes from Sveen Nilsen from
Yes. Hello. Good morning, everybody.
A couple of questions for me. Could you, I guess, it's a bit early, but could you maybe But we talked about the internal rate of return of this this asset. That's the first question. Broadly speaking, Francai, on even Anna has been tremendous acquisition for VINCI. Do you believe, I think that will be will be the same?
To the same case of magnitude, I would say. And then, could you maybe comment on the revenue car passenger? Maybe?
Maybe I can answer the first part of the question, Krishna, We cannot compare particularly with the UK. I mean, the situation are different, but in terms of timing, as Nicole explained before, I think the timing is particularly favorable for acquiring this asset, considering the uncertainty that has been commented about the Brexit And the fact that you have been able to negotiate directly with GIP is the best evidence of what I just said. And the multiple, which is below 20 times EBITDA, EBITDA considering of the transaction, which will be which were completed in the recent past in the U. K. Or another evidence.
In terms of a rate of return, I mean, it's a bit early to answer this question. Let us finished the closing of the transaction, and then we will answer the question in next year.
Okay. Thanks. What they can add to the example given by Cristal, each case is different, but the fact that we move to the Japanese system, as a first mover, the fact that we believe in Portugal end of 2012. That's a difficult time for Euro. I would say the parallel is that investing today in London helps us to have left competition probably, and it was the case 2 years ago for the deal of longevity.
A very reasonable price for an asset, which doesn't change. I mean, I would say to London is London. 1st London is probably better than UK. We made our overall assumptions with UK GDP. And in our activity in and out, The population of London is rising, and it's a very attractive place for people moving out.
Sorry, for my UK colleagues, the weather makes it that, sometimes people need to leave to a vacation and to get the benefit of some elsewhere in the world. But also in, because I can see that I'm here in London. For the end of the year, it's a very attractive city for the two foreigners. And I mentioned it per year. Even if the pound level was remained a little bit slow, it would make this quite explicitly a little bit more attractive to a lot of individuals, which is precisely a very good market from Get Week.
So which is why It's more robust with the population and its ability to travel, which is higher than anywhere in the world, but also a very attractive, metropolitan city for tourism. And as you know, the traffic of Gatwick is mostly tourism, and visit friends, and relative. It's a very high level market. So I would say, yes, we believe in New South Africa at this time. Which probably helps us to get very reasonable price for unlimited time.
So, We really believe in London, for unlimited time, which is very high potential, in the world aviation market.
Thank you very much for your answers.
The next
question comes from Alexis Genas from Pango. Sir, please go ahead.
How will VINCI finance the acquisition and what will be the impact on the net leverage ratio of VINCI and capex?
The financing of the acquisition will be made through to borrowing, in town, the position, are not negotiated yet. But we have been solicited already by many banking partners. So I think we will be able to optimize the condition of this additional borrowing?
So fully debt financed.
Yes. Of course. Yes. Of course. Are are you meaning that we would increase our technical to someone's gateway?
Yes. It's all that. Correct? All that. So, that's the first answer.
What was your other question?
What would be the net, with your pro form a net leverage ratio for VINCI as a whole and then for Gatwick on the panel basis, will Gatwick just remain accept.
Oh, Gatwick, there will be no change in the financial situation since Gatwick has already the debt, which is, which amounts to something around 2.60.7000000000 tons, which is ring fence, as you probably know, it's rated the BBB plus by S And P and also by Moody's. So we have no intention whatsoever to change the leverage, present leverage of Gatwick. But as soon as I explained it, we will consolidate the assets, which means that we will consolidate in our balance sheet. This debt even if it's entirely a ring fence, which means that in terms of risk analysis, I believe that the rating agencies shouldn't shouldn't change their appraisal of VINCI because of this additional consolidated debt. What they will consider would be, in my opinion, only the acquisition debt which will amount, to a 2,900,000,000 approximately in pounds, which shouldn't affect either the rating appraisal of the group.
Okay. So you think the
the rating will mean as it is, but, do you think it's the same for the outlooks?
We haven't been, we haven't met with the rating agency, but considering the analysis they provided in the recent past, we believe we have enough headroom to increase our debt without affecting the rating.
Okay. One follow-up question, if I may. So given that you've now acquired Gatwick, obviously, there's lots of speculation that you you could be a potential acquirer of a majority or a huge stake in airport. And how should that prioritization be advertised? Does this Gatwick acquisition influence how much you would be willing to pay for airport delivery in any way affects how you approach that potential transaction?
We are pragmatic calls. So I hope all the play is not on the table for the moment. We have this fantastic opportunity the car in majority stake in get written. We decided to save it. The better government decide or not decide what they get to do, but I'll apologize.
We will consider the issue. For the 12 months. It's not the time to answer the question because it's not on the table.
Alright. Let me ask you a look differently. Given that you have a you have someone less room within the rating given the acquisition of Gatwick, would you be should ADP arrive at
us, would you be
a little less willing to, you know, pay a smaller amount so that you can protect your current rating.
Is this an issue that we will discuss with directing agencies on in due time probably in the course of the first half of next year.
The next question comes from Jim Amonell from Legal And General.
Hi, there. Good morning. Just a follow-up question on your financing plans. I know you said they're not finalized yet and that you're intending to finance by the but just in terms of the potential, that the April of the party comes off, comes off, available some stage, are are there any assets within the Vansi portfolio which you you could consider monetizing to part finance any any M and A?
Now that's much too early to to say to answer this question. Since we don't even know what are the intention of a French government, we're not going to talk about potential disposal of assets.
This deal? Or is it are you are you set on? And this is
There's no deal. Not on the table. So I'm not going to be in a dream, a potential deal. In order to finance a deal which is not on the table at this moment.
So I just wanted to, I met in reference to this, to this Gatwick deal that is disposal assets.
Oh, no. Excuse me. To make this specific deal, there is no need to dispose anything.
Okay.
We would just increase the leverage of the group.
Super. That's great. Thanks very much.
The next question comes from Shirley Molavina from VA patient phone. I will pass it to the next person. Our next question comes from Sharon Bijan from Columbia Tree Media Investment.
Thank you. I've got a few follow-up questions. 3, and the first one is on funding. Are we should we expect any issuance from on the group at a parent level to finance this acquisition in the coming months? Secondly, the access is operating at capacity already, I believe, and will you consider renewing the planning permission for the 2nd runway of Patrick And thirdly, some good good this is happening in March.
I mean, how much of disruption are you expecting to volumes shortly after March? And given the comments on potential failure of smaller airlines as well, how quickly could you expect to fill available airline slots or landing slots as they come up over the next couple of years?
I will answer the first question, and Nicolas will answer the other 2. In terms of the new issues, at the branch company level, as you know, we we issue bonds on our regular basis the trans company level in order to refinance the debt of the group. We obviously will continue to do that. And we might issue bonds in the course of the first half of the year. When we have more precise view on the date of closing of the deal.
Bouncy airport itself isn't going to be a standalone issue in future as close.
Our intention. Not at the vast share possible, but on an asset, at an asset level, we have already issued, that instance, in the case of the Dominican Republic, which we own fully, we have issued, a bond 2 years ago. So that's the facility we have, but not at the Versace Airport level.
Okay. Got it. Thanks.
[SPEAKER UNIDENTIFIED
COMPANY REPRESENTATIVE:]
Well, did
your operational questions? First, crunch on the London market, which make the airlines approach their planes replicate or British, I was able to replace bigger ones in order for the same number of movements to increase the number of passenger. I love IAG and easyJet are going very well. They increase a lot of their their flight, their flight is high in Gatwick. Secondly, we have plans following the management and what the IP had prepared to do a small technical adaptation of physical and also with the technology.
So to move ahead progressively from 50 to 60 movements per hour to electric. It will last at least 15 years that we make the improvements. So the addition of the 2 makes that naturally We will not grow as a limited airport, but we have reasonable assumptions of regular growth in the next years followed by aircraft, a go, a goch. I met personally in the airlines. I mentioned they really liked this airport in terms of potential.
And secondly, the technical adaptations we are able to make to increase the number of pending movements progressively in the samples.
I'm the Brexit question.
I'm done. It's not UK. You have a something which is not in our price. We have a sort of random premium that we could get, thanks to the, intranible status of the 1601.
And then maybe finally on the filling in the airline slot, please. If if available slot fees as the smaller airlines fail.
Sorry. I didn't get the details. I didn't get the end of your question. Sorry.
You know, for for us, we've been following that. Seemed relatively similar to a number of weeks or a couple of months or so to fill in available slots as the airlines as airlines fail. Monarch, for example, going forward, do you see a change that pattern in terms of how quickly or easily airline spots could be sold?
No. What happens to Monarch is a very good example of the resilience of this Airports because Monarch said last year, immediately the slots were taken by the airlines already present on the airport very quickly. You didn't see the impact of 20172018 and the effects. It shows that you have a existing allowance with with a fleet, to to replace quite immediately. The slots validation of, of, of Catwick is so that some airlines could even be bought by over land in order to secure the slots.
Which makes us very comfortable about the resilience of this, of this assets on this side.
Next question comes from Eric Lemay from Diane Garner. Sir, please go ahead.
Couple of
questions, please. The first one regarding midterm assumption, I'm trying to build a model and And I would like to know if you could give us an idea of the level of the maintenance CapEx we could expect for this week the midterm and maybe maybe you could give us your view on the level of EBITDA margin, we could think in the middle of the long term for that week. Second question regarding, so slide number 5, you mentioned
asset viewership
as part of the care tax. Could you explain what this Is it kind of some of the concession fees? And the last question was on traffic. In New York, what is the maximum number of passengers that we can manage without any additional run rate?
Okay. So thank you for your question, Andre. It's probably too early for us to give you details of a model and that we, we, I think we can manage that after the acquisitions. We, we send you in slide 5. What are your take is today of the management.
We need to do both to be very dynamic on this aspect. And, we're trying to figure out what's going on our side. The capital today of the last years were a bit above the average far quite above the average because, you have, in such an airport, you have long lasting maintenance and repair CapEx. And you have some time, some ticks, we are more in the peak period. In order, you have 2 plants.
We have a plan which is integrated in the business fan of the, of the, the seller and ours, which is how to improve progressively from 50 to 60 movements with, I would say, half of the Harvey to have a quick acreage to the her, from the runway to the taxiway and to have also, the use of new technology about HCC. So that in the next 15 years, progressively, we can move from 50 to 60 movements. That's the first idea. The second idea which is an upside. It's not in our plans and understand officially today.
Would there be a way to, use an existing catchy way to make it a sort of limited use, a runway to the north of the 51. It should probably help to move from 60 to 70 movements, even 0. So it's not. And now it says, but naturally would require a little bit more CapEx and also, profit, procedures, local prosecutors to get the authorization. This one is really on the side.
It's not in our acquisition, but there are good efforts ongoing to try to think how it could be possible. That's, that's a way. There is no, in, in this case. You don't have a sort of limit of number of passenger. Why?
Because the gauge of aircraft I mentioned is still ongoing and could lapse. For many, many years as the optimization of the shooters of the program today, yes, you have a lot of slots, which used, but there are still periods of the year, periods of the day where they're not fully used, so which is now there is no limit as a 6 member of passenger and flights in the future. But we can tell we are very reasonable in our approach to the future so that we are very confident and robust about these assumptions. Again, we have ideas to increase the number of movements potential upside if there is a Northern Railway and a gorgeous aircraft, which is already ongoing because we know the fleet evolution of the major airlines and also the new projects of Airbus And Boeing. It's just very confident for the future, about these assumptions.
You had a question about something that they cannot read?
Yes. You asked us
to to watch it, you know, at the public CapEx you have, for instance, in 2000 and 18 or slide number 5? Assets towards this
is a
limited speaking.
Assets towards
ship means maintenance CapEx. So I think that's the figure you're looking for.
Next question comes from Nicola Hart from Morgan Stanley.
Yes. Good morning, gentlemen. Thanks for keeping us busy with Christmas. Just wanted to know a couple of follow ups. First, mean, how do you pencil in, he throw the extensions to be the 3rd runway and how that would impact Getwig over the the medium to long term in terms of transfer of, of airlines out of Gatwick into into the new heat through.
Just on the on the CapEx and and, you know, capacity constraints and so on. In terms of terminal, so I understand the constraints on the runway. But in terms of terminals, we don't see, all you need to do, I think, you know, what, 50, 51,000,000 types to 2021. That's that's what we understood correctly. And last one on the on the financing.
So you don't plan to to re lever or to use a, an FTV on top of your, on top of your, your state in order to, to optimize your returns, you are happy with just basically paying your your equity of 2.9,000,000,000 and the returns that we generated, did you not intend to, basically, create a, a new terminated STB to to improve returns?
I answer the last question, Anika. I'm not sure to understand your point, but Since we intend to finance entirely the acquisition of our 50 percent plus through additional debt, I don't see what we could do, later than that. The addition of SPV wouldn't add wouldn't bring anything more unless we intend to, to sell part of the 50% to somebody else, which is not intentional. And I think the commission of borrowing advance fee level should be in any case much better than the one we could obtain out of the SPV. So it makes no sense to me to go in this direction.
About your operational questions.
I would say, no, we never said $61,000,000 is a limit. It's just the situation in 2021. The upgrades of aircraft is going to continue. The shorter use also, the capacity to move from 50 to 50 movements will not be done in 2021. It gives very much capacity for the future.
So, no, we, we, we, we don't stop and, it will go on growing after 2021 figures. What I did indeed is the final limit because, to be honest, we don't know exactly the type of aircraft that can be managed in 5 years as an average. We say that you have the market in and out And we took quite reasonable growth assumptions for the years after 2021, in order to use at the best capacity, yes, in 50 years time. You have a physical limit, if you stay with only one runway. But even in between, it was a regular growth which creates some value to the assets.
Okay. And can you confirm with Heathrow your
Another example, I would like to say that for instance, to show this extra capacity, we are going to be the new peer, Tier number 6, and it will show a new capacity again in 2023. So physically, we create regularly capacity to have more planes also to facilitate the better use of the railway, as it is today. So again, the market is positive. Let me select that Gatwick grew far higher than the European hubs in the past years. Even with these existing contracted growth prospects.
Okay.
The next question comes from Jujal from Kepler Cheuvreux. Sir, please go ahead.
Yes. Hello. I had two questions, please. The first one is, if you could, tell us more when you say, several times that the price paid, is very attractive. You are exclusively looking at the EBITDA multiple that you mentioned several times and you compare to previous deals in the in the sector.
Or, do you have, criteria in mind? And if yes, which ones and, yeah, for example, I'm very interested by, if IRR is a, something that you look, carefully and, what does it mean with the price? And, my second question, maybe you said it already, apologies. What is the Easter financial impact on on VINCI. If you could tell us at the end of the year, pre deal what was the net debt to EBITDA, which was expected, and, pro form a with the deal, how it changes.
It would be very useful. Thank you.
Is 2,900,000,000 for the acquisition. That's plus the 2.6, 2,700,000,000 of the asset to debt. That gives you the additional debt we'll have to add up to the to your forecast policy group and you add up around CHF 50,000,000 or CHF 16,000,000 found additional EBITDA with your forecast to the EBITDA of the group.
Okay. I have
As for the price, economic comparison between, the multiple, which is less than, 20 times EBITDA. Based on the forecast for the existing year compared to other transaction, which were completed in the U. In the recent past, like for instance, London City, replacing someone who wants, and in France, the privatization of this, for example. Which are not capital, concession, but limited duration concessions.
Just to add on this platform, naturally, we don't do a valuation on our side, just by multiples. We do, we take reasonable assumptions, and we think the return is interesting. We give you this appreciation because as it's too early before the time of the acquisitions to look into details, but with the assumptions we made, it's a good return. But if you compare to the verticals, it shows for, again, a limited priority, which you calculate it on the, actually, the, the, a very long time. A very good return compared to comparable assets we mentioned in the journal.
We can also make the comparison with maturing the growth will be higher in the landline city, but the multiple for landline city is far higher.
Okay. Thank you.
Next question comes from Dominik Taneke from Citigroup. Sir, please go ahead.
Yes. Hi. I just wanted to clarify, on funding once once again. You mentioned that that you will be debt funded. Can you clarify if that would be issued out of the policy level or out of the debt level?
Alright. Thank you.
Next question comes from Nick Tonio from Santander. Sir, please go ahead. Good morning.
One question So regarding the Vivian policy, which is the Vivian policy you sent with your new Financial Partners, GIP, is related to the net income to the cash flows because to wait and see whatever it is. The second question is related to the hedge of these cash flows, assuming that going forward, we could have a witness or the GDP. So to protect the equity method in this asset, how much the cashier will be hedged through exchange rates or it's a it's a ratio products. And, related to the, Google, now we are we are above three times EBITDA. But assuming that you are not a pure infrastructure company, which is the maximum leverage of the group that you feel comfortable with Thank you.
That's sorry. I had The the
first question was regarding the dividend policy. What I can tell you is that we agreed with GIP to to distribute, any cash that will remain available once everything has been settled, but the yet with low.
We're assuming the current leverage or increasing the leverage of the asset?
Now, as as it was said before, I think, our common goal is to to maintain, the current, rating policy of, of graphic airport, and this is a leverage. So we are going to increase further to the current limit that is, given in the financial documentation of the country.
Okay. In
in terms of the hedging of the cash flows, through your last part of the borrowing that we intend to put in place, finance this acquisition will be in town. As a result of that, there there will be a natural hedging between the the borrowing and and the dividend that we will proceed out to the assess. As for the minimum or maximum leverage, we can have at the level of the matching group. This is an issue which would be addressed, as I said before, when we start discussing with our main rating agencies, and I'm imposing the risk in the course of the 1st half of next year. The the level being determined by the level of the rating.
We intend to keep,
and I remind you that we have a minus, 3 13
It's positive outlook with the S and P and stable also. Please remove it.
Okay. Next question comes from Sharon Beaten from Columbia Tree Middle Investment. That's very dear.
Thank you gentlemen. My question has been answered. Thank you.
We have no further questions. Ladies and gentlemen, if you wish to ask a question, you need to press 1 on your telephone keypad. We have another question from Titoyo Cali from Santander. Sir please go ahead.
Apologies. I have a having an in question, which is related to the commercial commercial revenues. You said that most of the upside could come from the retail business. Do you have any plan to increase the soft taste of the return business? Thank you.
Yes. So the development, as you know, gas rates, probably with the former regulation and mostly because of the operational needs of most of the efforts that they meet pain a very efficient ratio. And that's part of the synergies we expect with our network. We will learn probably a lot with the way, Gatwick operate, a lot of passenger in a very short amount of time. And that will be extra value for our overall assets.
On the other side, if you know the assets, what is for sale and is in a very limited space And that's with our experience and working with the management. I think we can provide a better education of space and better outlet of a higher level that you see free to the presenters definitely. So yes, we have expect that our commercial is in the future, you're setting, you know, a better space in and of the lighting, new types of shops, more efficient, IR team.
Okay. So optimization of the current space?
Optimization of space, renegotiation of contracts, progressively, where we have a good track record and settings new types of shops, allowing higher yields from the passengers. Yes.
We have no further questions. Please and gentlemen, let me remind you that if you wish to ask a question, you need to press 1 on your telephone keypad. We have a new question from Pierre Russo from Vertcliff. Sir, please go ahead.
Yeah. Good morning, gentlemen. The press release mentioned, some closing considerations which could affect the, the EPC value give. Could you give up into more details on what could be the parts that you mentioned in the release? Thank you.
Your question regarding the conditions precedent to the closing?
No, the the change of the price, limited change of the price, it's on the community, the adaptation and process.
No, so it's
the acquisition is made, on the principle of lockbox mechanisms. So the price will be adjusted based on this logbox mechanism, which is, I mean, really standard. I think particular to mention around that.
Should I pass to the next person?
Your last question?
Last question is from Peter Aderman from Macquarie Securities. Sir, please go ahead.
Yes. One final question. At the very start of the presentation, you suggested that the transaction will be quite a quick accretive quite quickly, I think you said. Could you just give us some indication as to what your thinking is on that? Do you expect it to be accretive in the 1st full year of, consolidation?
We expect it to be accretive in the 1st 2 or 3 years of the acquisitions.
So not in the 1st full year 2020?
Depending on the performance of the asset, why not? But we be sure we expect it to be accretive in the 1st 2 or 3 years.
Okay, thank you. Obviously, it will depend on the condition at which we will finance the acquisition. We can have a more finished view but this will depend on the level of the cost of financing that we will obtain from the vendors at the parent level. So we prefer to be a bit conservative, but, we might do better. Should we optimize more than expected because of financing?
It will also depend
on some accounting assumptions that would have to be made in the first consolidation of this company once when the FMC application is closed.
Can you clarify what those accounting assumptions would be?
Depreciation. Okay.
Thank you very much.
We have no further questions.
So thank you
very much for your
time. Another happy New Year with a bit of advance. Bye.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.