The airport transaction market in 2015 saw a continuation of the strong activity seen in 2014, albeit at a lower overall level activity and with some deals taking longer to come to market than in the previous year. The attractiveness of airports to industry investors and infrastructure specialists remains strong, with traffic growing strongly worldwide. The outlook for more activity in the airport sector remains positive with the industry’s growing need for capital, pressures on government finances, and infrastructure investors seeking higher yield investments.
Airport transaction activity is increasingly global in nature, and this has created greater diversity in the deals conducted. Generally, transactions fall into three categories:
- Public-private partnerships (PPP)
- Mergers & acquisitions (M&A), including secondary market transactions
In the chart below are shown the EBITDA multiples of selected airport transactions since 2010. As one would expect, the airport transaction market has recovered strongly since the global financial crisis with EBITDA multiples typically around the mid to high teen level.
EBITDA multiples for selected airport transactions
Continuing economic difficulties across the Eurozone area provoked airport privatisation activity. Two airport privatisation deals in Europe were completed in 2015. The privatisation of two groups of regional airports in Greece was awarded to Fraport, and a 49.99% share in Toulouse-Blagnac Airport was awarded to the Chinese Symbiose consortium consisting of the Shandong Hi-Speed Group and Hong Kong-based investment firm Friedmann Pacific Asset Management.
Outside of Europe, the most significant airport transaction was the privatisation of Kansai and Osaka (Itami) international airports in Japan in a deal won by a consortium consisting of ORIX Corporation and Vinci Airports. This deal represents the first major airport privatisation in the country, and is expected to prove a catalyst for additional airport privatisations in Japan and the wider region. While there is a lot of international interest in the Japanese airports, bidders are also highly aware of the need for what appears to be a relatively limited pool of local partners.
It is expected that the remaining 55% government shareholding in Athens International Airport may be sold this year, as part of the Greek government’s debt-reduction measures. Given the strong interest in the Toulouse-Blagnac Airport sale, there is also an increasing expectation of further privatisations in France.
Public-Private Partnerships (PPP)
A PPP is a concession to operate all or part of an airport for a time limited period and is often driven by the need for significant new investment in facilities.
The fourth largest infrastructure deal across all industry sectors in 2015 was the New Istanbul Airport, with a sticker price of $6.4bn according to the 2015 InfraDeals report. The project is a 25-year Build Operate Transfer (BOT) scheme and when completed the airport will be the largest in the world. The financial close took place in November 2015, with project sponsors Cenzig Holding (20%), Kalyon (20%), Kolin (20%), Limak (20%), Mapa Construction (20%). The deal structure is equity $1.6bn and bank debt financing of $5.7bn over three facilities.
In February 2015 the Chilean government awarded a new 20-year terminal concession at Arturo Merino Benítez International Airport in Santiago, Chile to the Pudahuel consortium, consisting of Vinci Aeroports S.A.S., Aeroports de Paris S.A. and Astaldi.
M&A Activity and the Secondary Market
Particularly in Europe especially, there continues to be some level of activity in the secondary market. A future trend may be that the level of secondary market transactions decrease as airport equity moves from time-limited or closed-end funds (such as those within Macquarie MIRA and GIP) into pension funds with a longer-term investment horizon (such as USS and OTPP) and sovereign wealth funds such as CIC and Qatar.
With this type of transaction, it is difficult to predict future market activity, but there a number of equity stakes that lie within time-limited funds managed by MIRA and GIP that will be need to be sold in the near term (see table below).
2016 Pipeline and Beyond
The table below summarizes some of the deals we are aware of that have or are expected to come to market, between 2016 and 2018. As the following tables show, the pipeline is strong with activity all around the globe. The London City Airport deal is likely to be the first deal to be completed in 2016 and may set an interesting benchmark if the £2billion price tag set by the vendors, GIP and Highstar Capital, is achieved or even possibly beaten.
Latin America and Caribbean
Asia and Indian Sub-continent
We are proud to have worked on the following equity transactions mentioned in this news story as buy or sell-side advisors:
- Toulouse Airport
- Greek regional airports (Tranche A and B)
- Istanbul New Airport
- Kansai and Osaka airports
- Toulouse-Blagnac Airport
- London City Airport
- Mexico City Airport