CIMIC – Funding Update

CIMIC’s global parent, Grupo ACS, will receive a cash injection of at least $4.5 billion if it accepts an $8 billion offer from French infrastructure group VINCI for its industrial services business.

Should the above transaction proceed, it will relieve pressure on its global cash flows.

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The class action lawsuit filed against CIMIC, which alleges the group used supply chain financing to mislead investors about its cash flows and did not fully disclose the financial problems in its Middle Eastern joint venture, remains a negative overhang.

The share price has rallied 10% over the last week, which can be attributed to the funding news for the parent entity. We continue to like the investment theme and exposure to local infrastructure development, which CIMIC offers.

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