Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Heathrow stake sale opens the door for a resurgence in airport deals

Published Dec 01, 2023 12:18 Updated Dec 01, 2023 16:26
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: An aircraft lands at Edinburgh Airport in Scotland April 23, 2012. REUTERS/David Moir/File Photo 2/2
 
CAGR
+0.50%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SGEF
+1.24%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
FER
-0.71%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MQBKY
+2.12%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Andres Gonzalez, Emma-Victoria Farr and Elisa Anzolin

LONDON/FRANKFURT (Reuters) -In the wake of the COVID-19 pandemic, a rebound in travel and rising interest rates is leading some airport owners and operators to sell up after a dearth of dealmaking in the sector.

After Spanish infrastructure giant Ferrovial revealed a near $3 billion deal to sell its 25% stake in Britain's busiest airport Heathrow on Tuesday, a slew of other airports across Europe could be up for sale in 2024, according to bankers, investors and industry sources.

"There are green shoots of airports investments coming back to the market as post-Covid passenger demand recovers and also as a result of a sharp increase in underlying cost of debt", said Andras Kranicz, head of infrastructure finance, EMEA at BNP Paribas (EPA:BNPP).

"This has encouraged infrastructure equity investors away from highly regulated asset classes with relatively low achievable equity returns towards those which are more volatile, representing higher demand risk exposure and hence higher achievable returns," he added.

Among the largest of the airports that may see a change of ownership as soon as 2024, is Edinburgh whose U.S.-based owner Global Infrastructure Partners (GIP) is working on the sale of its majority stake in a process that may value the airport at over 2.5 billion euros ($2.72 billion), according to sources close to the situation.

GIP declined to comment.

AGS Airports, which oversees operations at Aberdeen, Glasgow, and Southampton airports and is owned by Australia's Macquarie and Spain's Ferrovial, may also follow, two people with knowledge of the plans said on Friday.

Ferrovial and Macquarie declined to comment.

Until recently there has been a dearth of deals in the sector which has faced headwinds such as rising interest rates and environmental concerns that have dampened valuations, investors and industry sources said.

Even including the sale of Heathrow, this year is the slowest for airport transactions in the past decade, totalling $5.9 billion globally to date, according to Dealogic data.

"Following the COVID-19 pandemic, (there has been) a change of perception in the investment community," said Agata Lyznik, spokesperson for trade association the Airports Council International (ACI) World.

"Airports as an asset class are now deemed more risky, given the unprecedented impact the pandemic has wrought on the aviation industry."

That means for some investors who have owned these assets for many years, now is the right time to sell out. Investors like Macquarie and GIP bought their stakes in European airports almost a decade ago and are now reaching the end of their usual investment holding period.

Among investors mulling their options are France-based Ardian and Credit Agricole (EPA:CAGR) Assurance, minority owners of 2i Aeroporti, which has a stake in the operator of Milan's Linate and Malpensa airports, according to three sources close to the matter. They have hired Mediobanca and Credit Agricole to find a buyer for a sale of their 49% stake in the company, the people said.

Ardian and Credit Agricole declined to comment.

Catania's airport operator SAC has hired Mediobanca and law firm Gianni & Origoni to assist in its "preparatory and operational phase" of a privatisation process, SAC Chief Executive Nico Torrisi said in an emailed statement.

Mediobanca declined to comment.

VALUATIONS PRESSURED, SELLERS LINE UP

Buoying demand is booming airport travel in the wake of the pandemic combined with pent-up dealmaking hobbled by travel bans.

Next year is expected to be a milestone for global passenger traffic as figures reach 9.4 billion in 2024, surpassing the 9.2 billion passengers prior to the pandemic in 2019, according to ACI.

Deal activity is heating up particularly around European regional airports, which are relatively cheaper and easier to finance for potential buyers than huge hubs, one industry source said, who declined to be identified because the talks are private.

Valuations that bidders might pay for airports are expected to be far lower than the 20 times earnings before interest, tax, depreciation and amortization (EBITDA) multiple paid for Gatwick airport in 2018, the sources said.

Heathrow's sale valued the airport at 14.3 times EBITDA, according to JP Morgan analysis published on Wednesday.

UK's Esken, owner of regional Southend Airport, said in June it had started a process for the sale of the airport.

Industrial buyers are interested in the sector too. France's Vinci, recently said its M&A team is "very busy". In October, Vinci and Australian IFM Global Infrastructure Fund were selected as preferred investors in a planned aviation hub for central and eastern Europe where they may invest up to 8 billion zlotys ($1.91 billion).

On Thursday, Hungary's state-owned Corvinus and Vinci Airports notified the European Commission of a proposed joint takeover of Budapest's airport, according to a document posted on the EU website.

($1 = 0.9184 euros)

Heathrow stake sale opens the door for a resurgence in airport deals
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email