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Graña y Montero announces participation in Peruvian Southern Gas Pipeline

Lima, September 29, 2015 - Graña y Montero S.A.A. (NYSE: GRAM) (BVL: GRAMONC1) ("the Company" or "Graña y Montero") a leading Engineering and Construction company, announced today that after signing a Memorandum of Understanding with Odebrecht Latinvest, Graña y Montero Group agreed to participate with a 20% stake in the shareholder equity of Concesionaria Gasoducto Sur Peruano S.A. This agreement represents for the Group an approximate investment of US$ 215 million, which reflects a clear sign of confidence in the future of the country.

Concesionaria del Gasoducto Sur Peruano S.A., is responsible for the design, construction and operation of the pipeline system for gas transportation. The Southern gas pipeline is a project which will bring natural gas to the southern region of the country, especially to the provinces of Cuzco, Arequipa, Puno and Moquegua.

Mario Alvarado Pflucker, CEO of Graña y Montero, said that "this investment will generate new contracts for the Group for approximately US$ 1,000,000,000.00 (Backlog)".

He also indicated that "participating in the construction of the Southern Gas Pipeline- which is one of the most important infrastructure projects under execution in Peru- is in line with Graña y Montero’s strategy, and it will allow us to increase our know-how and gain presence as a regional player. Therefore, this is an opportunity that will allow us to face the challenges that arise in the future, thinking about the Group and in the more than 40,000 families that comprise it".

This project, which has an experienced high quality operator such as Enagas, will enter into the "stable cash flows" portfolio of projects, which is the strategy with which the Group has avoided the variable cycle of construction, and currently has allowed it to have more than half of its gross profit from long term stable businesses.

This Peruvian Group is one of the most qualified organizations for the construction and operation of gas pipelines in the region. Its participation in the construction of Camisea gas pipeline for TgP, as well as in the main pipeline of Lima for Cálidda, and in the one for Contugas in the Ica region, has allowed it to develop the skills for construction.

Moreover, last year it acquired together with Enagas and CPPIB, the company COGA which operates and maintains the transporting system of natural gas of Camisea, being TgP the concessionaire. "For the last years, we have been preparing ourselves in order to face such challenges. We believe we are ready to contribute with our knowledge and experience, and help GSP become one of the best developed projects in the country", indicated Alvarado.

He further noted that the strategy of partnering with companies of high technical ability has always been one of the mechanisms used in its 82 years of history; and that this has enabled them to strengthen and acquire new capacities, always guided by the Graña y Montero style.


Date: September 29, 2015