Airport expertise is vital for bidders

Papers from the Competition Commission kicking off the process reveal that those already running an airport will be favoured over non-operators who will have to provide “persuasive evidence” that they have the appropriate expertise.

So far, two parties have made their interest public – a consortium led by Carlyle Group and the investment banker Sir Angus Grossart, and a second consortium fronted by Ben Thomson, chairman of Inverleith Capital.

The commission states: “If a purchaser operates at least one major international airport, then, prima facie, we will interpret this as providing strong evidence that the purchaser possesses appropriate expertise to operate and develop the air-ports in question as viable independent competitors.

“If a purchaser does not operate such airports, then we will need to be provided with persuasive evidence regarding its access to expertise and ability to provide a management team with comprehensive experience of operating and developing airports.

“Where the existing BAA airport management team will be employed by the purchaser, this should in any event be supplemented with management with appropriate strategic, regulatory and financial skills to fulfil the functions currently resourced at a group level.”

The commission will also take a cautionary view of bids that involve airlines, particularly if they threaten to exclude rivals.

Only sketchy details of the two “bids” have emerged. Edinburgh financier Grossart is advising the private equity firm Carlyle Group, which has invested in aerospace, and an undisclosed group of business leaders which is believed to include Sir Brian Souter, the co-founder and chief executive of Stagecoach with whom he has been a co-investor in other deals. Souter has indicated that he would be interested privately in joining with partners in a bid.

Thomson has teamed up with Richard Jeffrey, a former managing director of Edinburgh airport, which will help their case, but they may need to team up with an existing infrastructure company. Thomson says he has access to finance and is ready to make an offer.

However, the commission’s requirements may also look favourably on companies such as Peel, which has experience of running Doncaster airport, or the big airport owners such as Manchester, Vancouver and Frankfurt who are expected to be in the running.

BAA, which put Edinburgh airport on sale following a commission inquiry, will publish a prospectus early in the new year.