Transurban shares slide amid more developments in the WestConnex saga.
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The Transurban Group Ltd (ASX: TCL) share price has spent all day in the red on Thursday.
Shares in the ASX toll road operator are slipping as offers are set to land for the remaining stakes in the WestConnex motorway project today. At the time of writing, the Transurban share price is down 2.9%, trading at $14.08.
Let’s investigate further.
What led us to this point?
Investors have been watching the Transurban share price closely this week as the company attempts to capture the remaining stake in the WestConnex project.
There are two stakes up for grabs in upcoming auctions for the project – both 24.5% each. The first bids are due today, with Transurban seeking to participate in both.
According to reports from yesterday’s Australian Financial Review (AFR), it appears the NSW state is “likely to take a week or so reviewing the bids”, before running “a quick auction for the second stake”.
Transurban is participating in the auction through its consortium, Sydney Transport Partners (STP) which already owns the remaining 51% stake of WestConnex.
Earlier this week, reports surfaced that rival bidders IFM investors may have pulled out of the running race for the bid, leaving Transurban in a prime position to nab the remaining stakes.
Macquarie Bank has weighed in on the debate and foresees Transurban raising around $4 billion in capital to fund the transactions. The total investment could reach up to $10 billion if STP wins both bids, according to the AFR.
What does this mean for the Transurban share price?
The Transurban share price has had a difficult year to date, posting a gain of only 3.4% since January 1.
Transurban shares are also only up by around 3% over the past 12 months, due to pressures on its business from the spate of COVID-related lockdowns in Australia and overseas.
In comparison, the S&P/ASX 200 index (ASX: XJO) has climbed around 25% over this same time.
However, Transurban’s entry into this race, as a bidder with a successful track record in these types of auctions, means “investors may finally have a reason to get excited about the Transurban share price”, as my Fool colleague Brendon eloquently put it on Tuesday.
Given the likely need for a capital raise to finance the bids, the company may seek an institutional placement with its “nearest and dearest” or play it through a rights issue, according to the company.
It’s likely that the outcome of Transurban’s bid in the WestConnex project will weigh in on its share price in some fashion.
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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.