Rival group of Morrison, NZSF and Infratil enters battle for Stansted airport
The process of the sale of Stansted is believed to have started. A team that is headed by Morrison & Co, which operates in New Zealand, Australia and Hong Kong, is making a bid. The team also includes the New Zealand Superannuation Fund and Infratil. The interest of Infratil in Stansted has surprised some industry observers because it is currently trying to sell its two smaller British airports – Prestwick and Manston – which have both lost Infratil a lot of money. Infratil, which runs about £2.5bn of assets, has twice written down Manston and Prestwick in the past two years, with their carrying value almost halving from £70m to £36m today. The two airports lost around £6m last year. The Morrison consortium is believed to have held early talks with Ryanair, and is in competition with Manchester Airports Group, which is in a potential deal with Australia’s Industry Funds Management. And others. The sale is complicated by the Government’s review of airport capacity in the south east, led Sir Howard Davies.
A consortium led by an Australasian investment manager has emerged as an early rival to Manchester Airports Group in the £1bn battle for Stansted airport.
Morrison & Co, which operates out of New Zealand, Australia and Hong Kong, is heading a bid team that also includes the New Zealand Superannuation Fund and Infratil, a Wellington-based infrastructure investor.
Stansted was finally put on the block last month after a three-year legal fight by owner, BAA, which tried unsuccessfully to halt the forced sale of the airport demanded by the Competition Commission.
BAA’s controlling shareholder, Ferrovial, is thought to have issued non-disclosure agreements last week to interested bidders, effectively kick-starting the process. The sale is being handled by Deutsche Bank and ING.
The interest of Infratil in Stansted has surprised some industry observers because it is currently trying to sell its two smaller British airports – Glasgow Prestwick and Manston in Kent – after a difficult foray into the UK aviation market.
Infratil, which runs about £2.5bn of assets, has twice written down the airports in the past two years, with their carrying value almost halving from £70m to £36m today. The two airports lost around £6m last year.
Infratil’s operations at Prestwick have also enabled the company to develop a relationship with Ryanair – the low-fare airline responsible for almost 70% of Stansted’s traffic. The Morrison consortium is believed to have held early talks with Ryanair.
The NZSF, which has more than £9bn assets, devotes about 9pc of the fund to infrastructure investment, spanning airports, transport, energy and oil.
The Morrison consortium faces early competition from the council-owned Manchester Airports Group, which is building up its firepower via a potential deal with Australia’s Industry Funds Management.
The giant antipodean infrastructure investor, which has around £21bn under management, has agreed to inject about £1bn for a 35% stake in the Manchester airport company – on the condition it wins the bid for Stansted.
The Stansted auction, which may also attract interest from JP Morgan, Citi Infrastructure Partners and Morgan Stanley Infrastructure Partners, is complicated by the Government’s review of airport capacity in the south east, led by former Financial Services Authority chairman Sir Howard Davies.
While there will be no decision on where to build a new runway before 2015, the recommendations of the Davies Commission could have a major impact on Stansted’s value.
Michael O’Leary, the Ryanair chief executive, can also influence how much BAA gets for Stansted. He has already expressed interest in taking a minority stake in any new owner of the airport as long as it agrees to lower both landing charges and the cost of building new facilities.
Mr O’Leary has also attempted to drive down the price by declaring that any bid based on the airport’s £1.3bn regulated asset base – the regulator’s proxy for its value – is “artificial” and based on “Noddy land” economics.