Edinburgh Airport sold to Global Infrastructure Partnership for £807m
A deal has been struck to sell Edinburgh Airport to the owner of Gatwick and London City airports for £807m. GIP has beaten a consortium led by another infrastructure investor, JP Morgan Asset Management. The sale price, slightly more than expected, is payable in full at closing of the deal, expected in May. It is thought that GIP intends to improve the speed at which passengers move through the airport at check-in, security and baggage handling, and to link the airport with new routes. Its investment pattern is to sell the asset on after about 7 years. GIP is said to have improved the passenger experience at Gatwick. Edinburgh airport handled 9.5m passengers last year, caters for about 40 airlines, serves more than 100 destinations and currently generates around £50m EBITDA annually.
23 April 2012 (BBC)
A deal has been struck to sell Edinburgh Airport to the owner of Gatwick and London City airports for £807m.
Global Infrastructure Partnership (GIP) has beaten off competition from a consortium led by another infrastructure investor, JP Morgan Asset Management.
The operator BAA was ordered to sell either Edinburgh or Glasgow airports.
The sale price is payable in full at closing of the deal, expected in May.
Edinburgh Airport was put on the market by its owner BAA last October, after the Competition Commission ruled that it had to sell either Edinburgh or Glasgow.
The winning price, expected to be paid at the end of May, is considerably more than had been expected.
Three years ago, Spanish-owned BAA sold Gatwick Airport to GIP, under the same regulatory requirement to break up assets that had previously been state-owned.
It is thought that GIP intends to improve the speed at which passengers move through the airport at check-in, security and baggage handling, and to link the Scottish capital with new routes.
Its investment pattern is to sell the asset on after about seven years.
Adebayo Ogunlesi, chairman and managing partner of GIP, said: “Edinburgh Airport is a high quality infrastructure asset. Its acquisition is a landmark deal for GIP and represents the first investment by GIP II.
“We see significant opportunity to apply our tested and successful operational expertise and our knowledge of the global airports sector to develop and enhance the performance of Edinburgh Airport in years to come.”
Colin Matthews, chief executive of BAA, said: “Edinburgh Airport and its team have been part of BAA for a long time and we are proud of its achievements.
“We wish the new owners every success and are confident the airport will continue to flourish.
“BAA will continue to focus on improving passengers’ journeys at Heathrow and its other airports.”
The Scottish Passenger Agents’ Association welcomed the news and said that GIP had improved the experience for passengers at Gatwick since it took over the airport three years ago and expected the same at Edinburgh.
Simon Calder, travel editor at The Independent, said: “What they have done is remarkable things.
“They’ve greatly improved the passenger experience so that people are tending to choose the airport ahead of others and secondly they are attracting airlines.”
He added: “It’s now going to get very, very interesting and the beneficiaries will be the Scottish travelling public.”
Meanwhile a spokesman for the unsuccessful bidders, JP Morgan Asset Management, said: “While we are disappointed at the outcome. We wish the new owners and all concerned with Edinburgh Airport well.”
Related BBC Stories
GIP to snap up Edinburgh airport in £850m deal
Global Infrastructure Partners, the owner of Gatwick and City airport, is poised to acquire Edinburgh airport for around £850m.
23 Apr 2012
The investment firm is in advanced discussions to buy the Scottish airport from Heathrow owner BAA and a deal could be announced as early as today, The Daily Telegraph has learned.
GIP, founded by former dealmakers from Credit Suisse and General Electric, has been vying with a consortium led by JP Morgan’s infrastructure fund to buy the asset.
Barring an eleventh hour hitch, City sources said GIP is now the clear “front runner” to win the contest following the second and final round of bidding last Tuesday.
The airport will bolster GIP’s position as one of the leading airport owners in Britain. The investment company bought Gatwick airport from BAA three years ago for £1.5bn.
JP Morgan’s infrastructure fund was working with Korea’s Incheon International Airport and Tiaa-Cref, a huge American teachers’ pension fund, on the bid for Edinburgh airport.
BAA, a division of the Spanish infrastructure company Ferrovial, has been forced to sell Edinburgh after regulators decided it controlled too much of the UK market. The company was ordered to off-load three of its airports.
Some of the other parties that looked at buying Edinburgh airport – which handled 9.5m passengers last year, caters for about 40 airlines and serves more than 100 destinations – included private equity firms, Carlyle and 3i.
The private equity groups dropped out, apparently because of the high price the asset was commanding.
The price tag is considered impressive by analysts since the airport currently generates around £50m before interest, taxes, depreciation, and amortization (ebitda) on sales of £110m.
But, unlike other airports, the price is not hampered by the “regulatory asset base” or RAB which is a proxy value for the asset set by the regulator.
Meanwhile,experts said the price is not unreasonable in an environment where infrastructure assets are in hot demand.
BAA and GIP both declined to comment.
Related Telegraph articles
- GIP and JP Morgan in dogfight for Edinburgh airport 01 Apr 2012
- GIP and 3i frontrunners to buy Edinburgh Airport 11 Feb 2012
Gatwick airport sold for £1.5bn
London City airport owner prepares for sale
GIP wants new chief executive to review exit options, in hope of eventually fetching £1.25bn. January 2012
and http://news.bbc.co.uk/1/hi/business/6039686.stm possibly sold to AIG in 2006 for £750 million.
BAA bought in June 2006 for £10 billion
In June 2006, a Ferrovial-led consortium purchased BAA Limited, for £10 billion
How to BAA and GIP annual passenger numbers compare?
Looking at the situation once Edinburgh has been sold to GIP:
46,052,356 passengers in 2011. (CAA data) GIP airports (Gatwick + Edinburgh + London City)
99,211,182 passengers in 2011 for the BAA airports (Heathrow + Stansted + Glasgow + Aberdeen + Southampton)