Comment: Qatar’s the main winner as BAA is pared back

IF THEY knew then what they know now it is very unlikely that Spanish infrastructure group Ferrovial would have swooped six years ago to buy BAA, the privatised former British Airports Authority.

BAA’s decision yesterday to give up the fight to keep Stansted airport after a three-year battle with the Competition Commission is just a continuation of the way the wind has been blowing.

The wheels have not come off Ferrovial’s British adventure, but the Spanish are clearly chastened by a regulatory clampdown that has demolished the arithmetic that supported its move on BAA in 2006.

Clearly, Ferrovial decided the litigation fees would be too testing and that too much boardroom time would be absorbed in trying to retain Stansted, the UK’s fourth-biggest airport, and that the legal precedents were not good.

Perhaps the decision has also been softened by the fact that Stansted’s traffic numbers have been falling steadily since 2007. Last month’s figures from BAA showed them down by another 4.6 per cent so far in 2012.

It follows last week’s decision by the Spanish to sell more than 10 per cent of its holding in its British business to the acquisitive moneymen of Qatar, joint shareholders in the BAA consortium, for £476m.

That was another step in the parent company amassing cash to realign its global strategy so that it is less dependent on its reined-in British subsidiary.

Back in 2006, the Spaniards had wanted to diversify their asset base and were attracted by the near-monopoly position of BAA, seeing it as a relatively risk-free bet with the potential for significant upside from outsourcing operations and higher margins. But the regulatory mood music around BAA changed after it paid what aviation analysts believed was a full price of more than £10 billion.

As public complaints rose around BAA’s operations, which showed no real operational improvement as far as consumers were concerned, the Competition Commission (CC) first forced Ferrovial to sell Gatwick for £1.5bn in 2009. A legal challenge by Ferrovial to the CC’s decision delayed its takeoff but could not abort it,

BAA’s parent was then forced to flog Edinburgh – for more than £800m to Global Infrastructure Partners – because the commission was unhappy about the stranglehold it had over the Scottish aviation market.

In short, BAA, from a position of virtually ironclad commercial strength in Britain, will be left with Heathrow in London, together with Aberdeen, Glasgow and Southampton. That was never Ferrovial’s gameplan and it now wishes to plough money into faster-growing aviation markets such as Latin America.

The sale of a stake in BAA comes as the subsidiary’s other shareholders, Britannia Airport Partners and GIC, have also sold stakes to Qatar Holdings, raising the latter’s overall holding to 20 per cent.

As a result, Qatar takes an even bigger slice of Britain’s corporate and infrastructure fabric, given its substantial minority stakes in Barclays, Sainsbury’s and the London Stock Exchange.

Red carpet across the channel for bankers

IT WAS the French diplomat Talleyrand who coined the elegantly cynical phrase: “It was worse than a sin. It was a mistake”. It seems, from anecdotal evidence and taking soundings of headhunters, that some of that financial realpolitik spirit abides today. French bankers are reportedly ignoring the City of London’s scandals to beat a path there and benefit from a lower tax and apparently lighter regulatory environment than back home.

It is said French financiers are not only attracted to London by taking more money home, but also by not being subjected to the same level of public opprobrium to their trade in Britain as in newly socialist France. They are taking David Cameron’s famous “red carpet” to the Square Mile.

Despite its travails, London continues to top the Global Financial Centres index. Perhaps the well-heeled M&A men and traders are also amused by tales passed on by their expatriate colleagues in the palmy banker residential enclaves of South Kensington, Fulham and Notting Hill.

A notice recently spotted on front windows of very upmarket gents dry-cleaners in these areas reads: “Bankers still welcome.”