Ferrovial Set To Consider Early Bids For Gatwick
Ferrovial, under pressure from regulators to sell London's Gatwick Airport, has received indicative offers from bidders including the operators of London City, Budapest and Chicago Midway airports.
But although several parties are vying for Britain's second-busiest airport, none would comment on how much they might pay, and analysts said tough credit markets and a drop in passenger numbers could crimp valuations.
A spokesman for Ferrovial's British airports arm BAA said first-round bids for the airport were due on Monday, but declined to comment further on the process.
Global Infrastructure Partners (GIP), a joint venture between General Electric and Credit Suisse and owner of London City Airport, was first to confirm a definite bid for Gatwick, which was put up for sale last year.
"I can confirm a bid is going in today, and will be by the deadline," a GIP spokesman said, although he would not say how much was being offered or whether GIP had any bidding partners.
Germany's Hochtief, the owner of Budapest Airport, later said it too had submitted a bid, also without adding further detail.
Another bidder is the consortium that bought a 99-year lease on Chicago's Midway Airport last year, in the first privatisation of a major US airport.
The consortium, made up of Citigroup unit Citi Infrastructure Investors, Vancouver Airport Services and John Hancock Life Insurance, is bidding as the Lysander Gatwick Investment Group, a spokesman said.
It is being advised by experts including former British Airways chief executive Bob Ayling, he said, while Spanish bank Santander is acting as financial adviser.
And sources familiar with the matter said Deutsche Bank's RREEF Infrastructure will make an approach in partnership with Australia's Babcock & Brown.
Both RREEF and Babcock & Brown declined to comment.
Gatwick is part of Ferrovial's seven-airport monopoly BAA, which Britain's competition regulators have proposed should be broken up. Analysts have said the Gatwick sale could net its debt-laden owner up to GBP2 billion pounds (USD$2.95 billion).
BAA chief executive Colin Matthews told reporters last week that there had been "serious interest" in Gatwick, which has about 35 million passengers a year.
HSBC and Royal Bank of Scotland are running the sales process. Sources close to BAA said the two banks would be willing to give credit of up to GBP1.6 billion pounds to a potential buyer as long as it met certain criteria.
Manchester Airport Group and 3i Infrastructure have both said they would look at a bid, although neither would comment further on Monday.
However, Frankfurt Airport-owner Fraport said on Monday it would not be making an offer.
The potential value of bids has been estimated at about GBP2 billion, but analysts have cautioned that achieving a premium to the Regulated Asset Base (RAB) -- a way of valuing infrastructure assets -- of GBP1.7 billion may be difficult.
"It remains to be seen whether GBP2 billion will be achievable... given that traffic at the airport is in free fall and given the continuing difficult state of the credit markets," Collins Stewart aviation analyst Andrew Fitchie said in a note.
BAA said passenger numbers at Gatwick fell 13.8 percent year-on-year in December.
Ferrovial put Gatwick up for sale to pre-empt a likely order to do so by Britain's Competition Commission later this year. In December the Commission also proposed the sale of London's Stansted Airport as well as Edinburgh in Scotland.
The Spanish company will be allowed to keep Heathrow, one of the world's busiest airports with 65 million passengers a year, where it was last week controversially awarded government approval for a third runway.
Copyright © 2009 Aviation News Release
