Four bidders lined up for airport sale

FOUR parties are expected to meet a first-round deadline this week for those interested in bidding for Edinburgh Airport.

Analysts say the sale has attracted a high calibre of potential acquirers and that owner BAA can expect a successful bid at the top end of the £600 million to £700m range.

Contrary to some speculation, Global Infrastructure Partners (GIP) will bid alone and its experience in acquiring and operating Gatwick and London City Airports will make it the frontrunner. It has been wrongly linked to a joint approach with Allianz.

3i is believed to have teamed up with M&G Infracapital and the Universities Superannuation Scheme. Another private equity group, Carlyle, will bid alongside Edinburgh-based merchant bank Noble Grossart. It may be joined by a number of other Scottish institutional investors and entrepreneurs including Sir Brian Souter. The fourth contender is understood to be the infrastructure fund of JP Morgan Asset Management.

It is thought Arcus Infrastructure Partners, which acquired Forth Ports last year, and a Scottish consortium led by Ben Thomson, the chairman of Inverleith Capital, have decided not to bid. One source suggested that Thomson’s bid partner Richard Jeffrey, former managing director of the airport, may have decided to join the 3i consortia, which has hired the Australian investment bank Macquarie as adviser.

Canadian institutional investors who were also said to be interested are believed to have set their sights instead on Stansted, another BAA-owned airport which will be next to go on sale.

Others thought to have requested details on the sale of Edinburgh include 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, and that final bids will be lodged in April.

GIP 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.

It would want to work 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.

Carlyle Group is considered the main rival to GIP and is thought likely to recruit Stagecoach boss Souter to help raise funds, probably through his investment vehicle Souter Investments, and to provide some local knowledge and contacts. Sir Angus Grossart is lending his support to the Carlyle Group bid.

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.