Manchester Airports Group could float to fund Stansted bid
Manchester Airports Group is considering a partial floatation as it looks to raise funds for the acquisition of Stansted or Edinburgh airport. They might form a joint venture with others – including Greater Manchester Pension Fund and Canadian infrastructure investor Borealis – to buy another airport. MAG is also trying to build an Airport City. They regard Stansted or Edinburgh as adding quality to the group. MAG earlier made a bid for Gatwick, but withdrew the bid. Manchester city council has a 55% stake in MAG, while each of the 9 other Greater Manchester local authorities own 5% each. First-round bids for Edinburgh airport are due in by mid-February. Analysts estimate it could fetch up to £600m.
15.1.2012 (Manchester Evening News)
Manchester Airports Group is considering a partial floatation as it looks to raise funds for the acquisition of Stansted or Edinburgh airport.
A range of options are currently on the table as part of a strategic review of the business, which could include a share issue or the formation of a joint venture to fund its expansion.
Rival airports operator BAA has been ordered by the Competition Commission to sell Stansted and either Glasgow or Edinburgh airports.
A MAG spokesman said: “With stretching growth targets across our airport portfolio and major developments ahead, including the £650m Manchester Airport City, we are finalising a strategic review of our business with a view to realising our ambition to become the premier airport management and services company, including the option of adding a quality airport to the group.
“Like any growing business we explore all options to fund our growth plans to drive greater shareholder returns.”
BAA has already contacted potential buyers for Edinburgh, which has 9.4 million passengers a year, and first round bids are being sought by mid-February.
But is is appealing against the ruling to sell Stansted, which has 18 million passengers annually.
MAG, which already owns East Midlands, Humberside and Bournemouth airports as well as Manchester, had previously expressed an interest in swooping for BAA’s assets, but appeared to cool on the idea last year.
MAG chief executive Charlie Cornish was understood to be reluctant to incur the costs of preparing and submitting a bid unless it had a strong chance of being successful.
In July MAG said it would prioritise the £650m Airport City scheme, an enterprise zone led by the group’s property arm MAG Developments which is set to create up to 21,000 jobs in the area around the airport.
Now the group is understood to have approached a number of funds with its acquisition plans, including Greater Manchester Pension Fund and Canadian infrastructure investor Borealis.
MAG previously formed a consortium with GMPF and Borealis to buy Gatwick Airport, but it pulled out of the race in 2009 after refusing to meet BAA’s price of £1.5bn.
The airport was later sold to US-based investment fund Global Infrastructure Partners for around £1.5bn.
Manchester city council has a 55 per cent stake in the group, while each of the nine other Greater Manchester local authorities own five per cent each.
Together they benefited to the tune of £20m in dividends paid for the year to March 31, 2011, when MAG reported profits of £80m on revenues of £350m.
Article in the Sunday Times 15.1.2012 says:
Airport sale funds raid on Stansted or Edinburgh
Manchester councils may auction minority stake to bankroll takeover approach for Essex hub — or Edinburgh
by Karl West and Ben Marlow
JP Morgan Cazenove has been appointed to advise on the strategic review.
Manchester Airports Group reported profits of £80m for the year to March 31, 2011, on revenues of £350m. It paid a total dividend of £20m to the councils.
…. They serve 24m passengers a year, with Manchester accounting for almost 19m — more than Stansted, which handled 18m passengers in 2011.
A source said, if the operator decides to issue new equity, the councils would want to remain the majority shareholder.
……….BAA ….It is appealing against the Stansted ruling but is pressing ahead with the sale of Edinburgh. Gatwick was sold to Global Infrastructure Partners, owner of London City airport, for £1.5 billion in 2009.
BAA issued information memorandums on Edinburgh to potential buyers last week. First-round bids are due in by mid-February. Analysts estimate the Scottish hub could fetch up to £600m.
Bidders include a group led by Carlyle, which has appointed Lazard as its adviser. Others in the running are Global Infrastructure Partners and a consortium comprising 3i and the Universities Superannuation Scheme.
Comments by AirportWatch members:
Firstly, the sale of Edinburgh and Stansted is part of a desire by Government to break up a monopoly. If MAG and/or GIP are allowed to buy either Edinburgh of Stansted it would seem that we are only making another monopoly?
Secondly I consider it wholly inappropriate and indeed, immoral, for any Government or Local Authority body to seek to make profit from an industry which makes such a contribution to increasing climate change (though some would argue that it gives them the side effect of pleasurable holidays which are their “right” to have).
My immediate concern on seeing this was ‘can we trust our local councils not to chase after an opportunity here?’ They’re strong in terms of opposition to expansion, but under the current government we’re seeing a run for development to capitalise on other funds like the New Homes Bonus which doesn’t exactly inspire the community with confidence.
For me the moral position could usefully be extended to cover the serious impropriety of local authorities being at once the owner of an airport and its planning authority. “Chinese Walls” be damned – most airports generate disturbance in places completely outside the owning local authority areas which get whatever financial benefits may be generated, the rest of us get the fallout. The local authorities will no doubt bang on about their duty to chargepayers to maximise the return on the public asset – but such assets should not, I insist, be in local authority ownership in the first place.
What about the wisdom of investing the Local Authority pensions in something that depends on a dwindling resource (oil) and causes a long term problem (climate change)? Seems that pensions that are aimed at 40 years in the future are as short sighted as the rest of the financial world!