Ferrovial wins I-24 with a record bid and raises the stakes on US tolls

A bid that stood out in the tender

Ferrovial has been awarded the concession for the I-24 Southeast Choice Lanes in Tennessee through a proposal whose concession value—the amount committed to the state—amounts to $24.8 billion. This figure significantly exceeds the bids from the other finalist consortia: approximately $7.4 billion from the alliance of Sacyr and its partners, and $7.25 billion from ACS, Acciona, and Meridiam.

The contract covers the design, financing, construction, and operation for 50 years of new toll express lanes along approximately 42 kilometers. Ferrovial competed with Transurban and Tikehau in the DriveTN consortium. The concession reinforces its presence in a business it already operates in several states of the country, but the magnitude of the bid has also focused attention on how it will be financed and what profitability it can generate.

It is important to distinguish the concession value from the investment planned to develop the project. Reports place the latter at around $9.2 billion; in contrast, the $24.8 billion corresponds to the payments committed to Tennessee during the concession. According to published information on the bid, approximately $24.3 billion of those payments would be concentrated in the early years, mainly during construction, which would last approximately eight years. The definitive financial structure is not yet known: the closing of the concession is scheduled for the fourth quarter of 2026, while the financial closing of the project is expected for the third quarter of 2027.

Profitability and financing, still under scrutiny

The distance between the DriveTN bid and those of its competitors reflects a particularly ambitious bet. To recover the disbursements and generate returns, the consortium will rely on toll revenues, in an express lane scheme where fees can vary according to congestion. But those revenues would occur while the project faces high payments and prolonged construction, raising uncertainty about timelines and profitability.

UBS preliminarily estimates an annual return on equity close to 7% and warns that value creation is not guaranteed. The firm compares that estimate with a profitability close to 20% for Ferrovial's managed lane portfolio. Based on its doubts about this project, it lowered its recommendation on the stock from buy to neutral and cut its target price from 65 to 59 euros. This is an analyst's valuation, not a confirmed result or a forecast necessarily shared by the market.

The revenue figures that have been circulated are also estimates, not guaranteed revenues. Some sources place the potential revenues of the project during its 50 years of operation at around $40 billion, with an estimated range of $35 billion to $45 billion. The actual result will depend, among other factors, on traffic, fees, costs, and financing. Therefore, those gross revenues do not equate to profits nor do they alone determine the final profitability.

The financial pressure of the calendar is another central aspect: if a substantial part of the payments is made before the highway operates fully, the consortium will have to obtain external resources. Among the alternatives mentioned by financial sources are bonds, public financing, capital increases, or asset sales. Available information does not detail which combination will be chosen by Ferrovial and its partners.

Rivalry moves to Georgia

The award also matters for what it anticipates for the next major tender. Ferrovial, ACS, Acciona, and Sacyr are competing for the I-285 East Express Lanes in Georgia. The consortia that have emerged group Ferrovial with Transurban and Star America; ACS and Acciona with Meridiam; and Sacyr with Plenary and Shikun & Binui. The published reference for the project is around $7.6 billion in investment. Its resolution was expected for the autumn, although the schedule may change.

The Tennessee result has fueled the concern of ACS, Acciona, and Sacyr regarding the possibility that Ferrovial repeats an aggressive bidding strategy in Georgia. That concern does not equate to a formal challenge: available information does not substantiate that those companies have appealed the award of the I-24.

For Ferrovial, the operation expands its portfolio of toll concessions in the United States; for its rivals, the next tender will be a new opportunity to compete for long-term assets. The award, by itself, does not allow concluding which of the consortia will achieve better returns. That assessment will have to wait until the definitive financial conditions of Tennessee and the economic outcome of the projects are known.