Some of the most picturesque scenery in the world can be witnessed cruising the Rhine River in Germany, spotting the castles which adorn its banks and cliffs at regular intervals.

Many of these castles were built by ‘robber barons’ - petty rulers whose minions would hold river commerce for ransom by means of chains and towers until an appropriate toll was paid.

Transurban Group is the preeminent ‘robber baron’ of our fossil-fuelled times.  Whilst modern toll roads, bridges, and tunnels lack much of the charm of the Rhine Valley their profit potential remains intact.  That ‘beep’ in your car on your morning commute which eats away at the margins of the fruits of your human capital on a daily basis is actually the sound of Transurban’s opportunity.  We’ll continue purchasing their services however, they are selling us more personal time and providing small relief from the traffic in our congested cities.  Or I could just be building castles in the air.

Rights Issue – WestConnex Acquisition

It is amazing how quickly some companies can raise capital.  The Robber Baron (refer to #Bull Case) Transurban Group (in conjunction with an Australian superannuation fund and a Canadian pension fund) is acquiring a controlling stake in WestConnex for $9.3 billion from the NSW Government.  Think of WestConnex as a gilded hamster wheel available for the use of those engaged in the rat-race in Western Sydney.  Transurban has looked to its existing share registry to raise the majority of capital necessary for this purchase.

Since the 31st of August 2018 Transurban has already raised most of the $4.2 billion it had earmarked to come from its institutional shareholders, with an approximately 1 share in 6 offer at $10.80 per share [1].  This represents a 10% discount from Transurban’s recent average price and is also below Strawman’s forecast of fair value [NB this forecast was created some months ago and does not necessarily factor in the WestConnex acquisition].

In the hopes of raising some further $4 billion this same discount is now available to retail shareholders but for a limited time only! [2]