CARLYLE Group, the US private equity company, is understood to have pulled out of the £600 million bid battle for Edinburgh airport, The Scotsman has learned.
The company’s withdrawal would leave three contenders who are expected to submit firm offers by the middle of April.
Carlyle’s exit has surprised many in the industry who considered it a strong candidate, given the line-up of partners it pulled together, including the Edinburgh-based investment bank Noble Grossart, run by Sir Angus Grossart.
The company was also believed to have attracted interest in joining a consortium from a number of other Scottish business leaders.
But it is also understood that Sir Brian Souter, the founder of transport group Stagecoach, was not engaged in talks with Carlyle, despite speculation that he was involved. He has since declared that, while potentially interested in joining the bid process, he is not taking part at this stage.
Sources are split on Carlyle’s reasons for pulling out. One said it could not raise sufficient finance while another claimed it became concerned at the expected price for an asset with an enterprise value (assets plus debt) of around £450m. A concern among some in the industry is that a bidder pays a high price and extracts cost out of it.
Those remaining are Global Infrastructure Partners, JP Morgan Asset Management, and a consortium of 3i, M&G Infracapital and the Universities Superannuation Scheme.
Offers are due to be lodged in April, and a buyer is expected to be selected in the early summer. All bidders will be able to carry out due diligence on the airport before lodging their offers.
It is thought that 50 parties expressed interest in the airport which was put on the market last autumn. They are thought to have included Manchester Airport Group; Fraport, owner of Frankfurt; Peel Holdings; and Aeroports de Paris.
Sources claim the airport will attract a bid that will be financed in an almost equal split of equity and debt.
Global Infrastructure Partners will bid alone. It is being advised by Royal Bank of Scotland and has made significant changes to London City and Gatwick since acquiring them in 2006 and 2009 respectively.
Sources say it wants to work closely with the Scottish Government, Edinburgh Council and others to improve the airport and Scotland’s connectivity, drawing on its global capability and airport expertise.
The company may not intend to be a long-term owner but would seek to add value as an active investor. At City it improved punctuality, increased runway capacity and departure lounge space as well as improving security and cutting queues.
At Gatwick it worked with airlines to reduce average check-in times from two minutes to 23 seconds, while security complaints fell by 50 per cent.
BAA, owned by the Spanish infrastructure conglomerate Ferrovial, chose to sell Edinburgh over Glasgow after being ordered to offload one of them to meet the requirements of a Competition Commission investigation. It also sold Gatwick and must dispose of Stansted.
Citi, BNP Paribas and Ernst & Young are advising BAA.