LONDON/FRANKFURT, Dec 1 (Reuters) – A rebound in travel demand and rising interest rates in the wake of the COVID-19 pandemic are prompting some airport owners and operators to expand their sector. Due to lack of transactions, they have decided to sell.
Bankers and investors were on fire after Spanish infrastructure giant Ferrovial (FERF.AS) unveiled a nearly $3 billion deal to sell a 25% stake in Britain’s busiest airport, Heathrow, on Tuesday. According to the report, many other airports across Europe could be put up for sale in 2024. said an industry source.
Andras Kranjic, head of EMEA infrastructure finance at BNP Paribas, said: “With the recovery in passenger demand post-COVID-19, and the sharp rise in potential debt costs, airport investment greenbacks are returning to the market. “
He added: “This will shift infrastructure investors away from highly regulated asset classes, where achievable equity returns are relatively low, and away from more regulated asset classes with higher demand risk and higher achievable returns.” “There is a shift towards more stable asset classes,” he added.
Edinburgh is one of the biggest airports to change ownership, potentially as early as 2024, with the airport’s US-based owner Global Infrastructure Partners (GIP) seeking to value the airport. The company is working to sell a majority stake in a process that could result in overpayment. The deal is valued at 2.5 billion euros ($2.72 billion), sources said.
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, could follow suit, two people familiar with the plans said on Friday.
Mr. Ferrovial and Mr. McCauley declined to comment.
Until recently, the sector was under-traded and facing headwinds such as rising interest rates and environmental concerns, pushing valuations down, investors and industry observers said.
Even including the sale of Heathrow, airport transactions this year have been the slowest in a decade, totaling $5.9 billion worldwide so far, according to Dealogic data.
“There has been a shift in perception in the investment community in the wake of the COVID-19 pandemic,” said Agata Riznik, a spokeswoman for industry group Airports Council International (ACI) World.
“Given the unprecedented impact the pandemic has had on the aviation industry, airports as an asset class are now considered riskier.”
This means that for some investors who have held these assets for years, now is the perfect time to exit. Investors such as Macquarie and GIP bought shares in European airports almost a decade ago and are now at the end of their typical investment holding period.
Among the investors weighing their options are France-based Ardian and Credit Agricole, a minority shareholder in 2i Aeroporti, operator of Milan’s Linate and Malpensa airports, three people familiar with the matter said. Also includes assurance. The company has hired Mediobanca (MDBI.MI) and Credit Agricole (CAGR.PA) to find a buyer for its 49% stake, people familiar with the matter said.
Ardien and Credit Agricole declined to comment.
Catania’s airport operator SAC has hired Mediobanca and law firm Gianni & Origoni to assist with the “preparatory and operational stages” of the privatization process, SAC CEO Nico Torrisi said in an email. said in an emailed statement.
Mediobanca declined to comment.
Valuations come under pressure and sellers line up
The increased demand has combined with a surge in airport travel due to the pandemic and deal negotiations stalled by travel bans.
Next year is expected to be a milestone year for global passenger numbers, with global passenger numbers reaching 9.4 billion in 2024, surpassing the pre-pandemic 9.2 billion in 2019, according to ACI.
One industry source, who requested anonymity because negotiations are private, said deal activity has been particularly strong around regional airports in Europe, which are relatively cheap compared to large hub airports and offer access to capital for potential buyers. It is said to be easy to procure.
The valuation that bidders are likely to pay for the airport is expected to be far lower than the 20 times earnings before interest, tax, depreciation, and amortization (EBITDA) paid for Gatwick in 2018, sources said. Ru.
The sale of Heathrow values the airport at 14.3 times EBITDA, according to a JPMorgan analysis released Wednesday.
British company Esken (ESKN.L), which owns regional Southend Airport, announced in June that it had begun the process of selling the airport.
Industrial buyers are also interested in this sector. France’s Vinci (SGEF.PA) recently said its M&A team is “very busy”. In October, Vinci and Australia’s IFM Global Infrastructure Fund were named preferred investors in a planned aviation hub in Central and Eastern Europe, with the potential to invest up to 8 billion zlotys ($1.91 billion) There is sex.
On Thursday, Hungary’s state-run Corvinus and Vincci airports notified the European Commission of a proposed joint acquisition of Budapest airport, according to a document posted on the EU’s website.
(1 dollar = 0.9184 euro)
Reporting by Emma-Victoria Farr, Andres Gonzalez and Elisa Anzolin; Additional reporting by Joanna Plucinska and Mathieu Rosemain; Editing by Anousha Sakoui and Elaine Hardcastle
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