• 19 may 2023
  • Blog
  • Assetmanagement

Globalvia: invest in the future

Investment Director Simon Nicolaas: 'As far as sustainability is concerned there’s always more to be done. Concession company Globalvia is well on its way though. As a long-term investor with a strong sustainability focus, PGGM can provide the support Globalvia needs to remain relevant and valuable in the future.'
Simon Nicolaas 2

Simon Nicolaas

Investment Director

Substantial investment
'In 2012 we joined Globalvia, back then a portfolio of road and rail concessions such as toll roads, metros and trams. It was a good deal with a structure that protected us in all sorts of ways. Under good conditions, we could start making direct investments; take a direct interest in companies or projects. Since our original investment we have provided more and more growth capital to the company, for which we decide what to spend it on. In the meantime, the transport concessions have been expanded with mobility innovation projects, electric buses, trams and high-speed rail.'

A lot of influence
‘In addition to providing growth capital, we bought out the company's longtime shareholders. We did this together with the two other shareholders of Globalvia: pension funds USS (British) and OPTrust (Canadian).  At the moment we are the largest investor, in the board of directors four out of ten voting directors are directors of PGGM. This gives us a lot of influence in decision-making. We also have our own asset management teams, who are not on the board, but are in direct contact with the management of Globalvia. Just like PGGM, USS and OPTrust are long-term investors, our interests are aligned: we want to create value in the long term and ensure that this company remains relevant and valuable in the future.'

SBTI: the tool to measure CO2 reduction
'In terms of ESG (environment, society and governance), Globalvia is far ahead, but how do you prove and communicate this?. In the field of CO2 reduction, this can be done with the independent Science Based Target Initiative (SBTI). SBTI is a partnership of, among others, the United Nations and the World Wildlife Fund. They check whether both your plans and the implementation of those plans are in line with the Paris Climate Agreement. Globalvia is one of the first companies in our portfolio with an 'SBTI approval', and an approved carbon reduction plan. Furthermore Globalvia includes the annual subtargets in the management bonuses. With our influence, we have been able to ensure that not only a credible plan is made, but management is also held accountable for implementing that plan. We are now trying to roll out the SBTI to more companies in our portfolio.'

Report sustainability efforts
'A company is never done in terms of sustainability, so there is always more to do. This also applies to Globalvia. But they are a frontrunner and well on their way. We have a lot of influence, so if we want to change something, we can. There is enough motivation, drive and brainpower among the shareholders and management to do so. This year, we are reporting a range of sustainability KPIs on a quarterly basis, for example in terms of safety, emissions, water use, diversity and the gender pay gap. This goes much further than just health &safety, which used to be the main focus when it came to responsible investment. But even with all those KPIs, the bulk of the sustainability efforts is still difficult to measure.'

The future for Globalvia looks very different from the past. In the west, not so many new roads are being built and – more importantly – mobility is changing. Mobility-as-a-service already exists to some extend in the Netherlands (with 1 ticket you can take both the train and the OV-bicycle), but it is still emerging in other countries. We are already trying to buy assets in that area. In Spain, for example, Globalvia has a stake in a company that operates high-speed electric trains, including between Madrid, Barcelona, Seville and Valencia. We recently made an investment in Go Ahead, a British bus company. Especially in central London, the government wants to replace the 'dirty', old buses with electric vehicles. Many traditional small bus companies don't have the money for that kind of investment. We have the opportunity to use our capital to make our own bus network more sustainable or to buy and electrify the smaller bus companies.'

Self-driving cars and passenger drones
'Another development in mobility is the self-driving car. A few years ago there were major concerns about the safety of self-driving cars, but the US is starting to convert some highway lanes for self-driving cars. New concessions are being rolled out and Globalvia plays a major role in this with its own software tools and apps for toll collection, maintenance and payments, and collaborations with companies that combine digital with physical infrastructure to enable these types of corridors. Another new mobility initiative is logistics and passenger drones. I'm not saying that these are all going to be insanely large and important investments, but it is a way to keep up and stay relevant.'

Difficult board discussions
'In addition to all the great developments, there are some hiccups along the way. For example, in the board discussions we sometimes run into differences in safety standards and culture between Europe, the US and Latin America. Latin American countries have substantially more road casualties than in the West, mainly due to the cultural difference and the fact that Latin American governments are less able and willing to invest in safety. It is often difficult for Globalvia to make large investments in road safety because they are bound by concession contracts with local authorities. However, Globalvia sets a common high standard to all its assets, no matter the country, promoting its progressive evolution. We do try to educate both governments and road users, for example by telling schools about the danger of crossing or irresponsible driving. Nevertheless, it is a difficult task to get countries in Latin America up to the same safety standards as Europe and the US.'

Being and staying relevant
‘As a long-term investor with a strong sustainability focus, we are helping this company move in the right direction. For the time being, we will not sell our stake in Globalvia. In addition, it is a good investment from a financial point of view. This has to do with our purchase of the right assets under the right conditions, but also because of our sustainability efforts. An example is the metro in Seville where Globalvia has a majority stake. We have saved more than 50% electricity, among other things by using the power generated by braking to have another metro pull up at the same time. This not only saves a lot of money, but it is also a good result in terms of sustainability. And if you want to remain relevant for governments that grant new concessions, your customers, your suppliers, or for employees, you need a very strong sustainability profile. And we are happy to contribute to this.'


Share or Print Article

click on the icon