Speculation grows that GIP and the consortium of Gatwick owners will sell the airport soon
Gatwick’s private equity owners have had a £175 million dividend as speculation mounts over a sale of the airport. The dividend, paid in October 2017, was up from £125m a year earlier and followed 6 months of rising passenger numbers and profits. Gatwick is owned by Global Infrastructure Partners (GIP) and a consortium of investors, who bought it for £1.5 billion in 2009 from the former airports monopoly BAA. They have improved the airport, attracting more airlines, and now have 44 million annual air passengers. That has increased the value of the airport to an estimated £6 – £8 billion. GIP also owned London City airport, which they sold almost 2 years ago for over £2 billion, making a huge profit. City experts believe GIP is now looking to sell one or both of its 2 remaining UK airports, Gatwick and Edinburgh – or at least reduce its stake. A sale of Gatwick would be a vast profit. There is speculation that GIP would have sold Edinburgh earlier, but held back due to the German election and complications of Brexit. Gatwick is still keen to build a 2nd runway, but the government prefers a 3rd Heathrow runway. Consultations on that will continue in 2018, and Gatwick continues to press for its runway – as that would raise the selling price.
Speculation grows over sale of Gatwick Airport
2nd January 2018 (CrawleyNews24)
The start of 2018 has already brought speculation that there may be an imminent sale of Gatwick Airport.
With a national newspaper reporting the speculation it has done nothing but stir up the interests from local businesses and leaders of how this would affect the local economy and infrastructure.
Suggested reports of huge increases in dividend payments due to the large swell in passenger numbers over the past year do indicate a rapid growth for the countries second busiest airport but also add fuel to the logic of a sale.
Currently owned between a plethora of investors and GIP, Global Infrastructure Partners, Gatwick has seen numerous improvements and advances since it was bought from BAA back in 2009.
Recently more exciting news came when Crawley Council approved the building of a new multi-million pound maintenance hub for Boeing at Gatwick, bringing even more jobs to the area.
What is uncertain though, is if a sale was to go ahead, whether it would occur before or after a decision on the second runway, as this would have huge implications on the airports value.
Local leaders have already commented on the speculation;
Crawley MP Henry Smith said:
“Ever since BAA sold Gatwick to GIP almost a decade ago the airport has been seen as an investment asset and if transferred again now it’s no great surprise. The positive of Gatwick’s private ownership is the over £1 billion which its owners have put in.
Crawley people should be cautious though that any further airport sale isn’t just about getting an extra runway, taking the profit and leaving local people with the cost of providing the rail, road and housing infrastructure that would be needed with such expansion.”
Jeremy Taylor, Chief Executive of Gatwick Diamond Business, commented:
“it’s not a surprise to see this speculation on the possible sale of Gatwick Airport. When GIP bought the airport in 2009 the financial method they used had a 10-12 year life and we’ve seen 58% already sold to Institutional Investors.”
“The bigger question is around the next runway as that decision will have a big impact on the value of Gatwick and, of course on the likely owners.
To my mind, it makes sense for GIP to hold onto their investment and to be the people behind the development of Gatwick’s second runway; something we continue to lobby for.”
Steve Sawyer, Executive Director of Manor Royal Business District Ltd said:
“The important thing for us is that, if Gatwick is sold, we maintain good relations with the owners and they understand the various relationships between the airport and surrounding area, including Manor Royal.
Since GIP has taken over Gatwick has flourished. I’m sure it’s even more attractive to a prospective buyer than it was and would be more so with permission to expand.
Some have speculated that GIP would sell at some point, so perhaps no major surprise but we will have to see.
It’s not a particular concern provided we can maintain positive relations to ensure the airport can succeed alongside and as part of the success of the area as a whole and not to its detriment. “
A spokesperson for Gatwick said they do not comment on speculation.
Gatwick’s private equity owners have reaped a £175m dividend as speculation mounts over a sale of the airport.
The dividend, paid in October, swelled from £125m a year earlier and followed six months of growing passenger numbers and profits.
Gatwick is owned by Global Infrastructure Partners (GIP) and a consortium of investors, which acquired it for £1.5bn in 2009 from the former airports monopoly BAA.
The owners have since transformed the airport, luring more airlines and handling more than 44m passengers a year. That has sent Gatwick’s value soaring to an estimated £6bn-£8bn.
GIP made a blockbuster profit from its £2bn-plus sale of London City airport almost two years ago, and City bankers believe it is now wrestling with whether to offload one or both of its two remaining airports — Gatwick and Edinburgh.
A sale of Gatwick would eclipse the returns on London City.
GIP is understood to have held a beauty parade of investment banks in May to handle a sale of Edinburgh, but a source said it got cold feet because of uncertainty caused by the German general election and postponed the sale. Brexit is also complicating its plans, with airport bosses steeled for a hit to passenger numbers.
Gatwick has been thwarted in its ambition to build a second runway, with both the independent Airports Commission and the government backing Heathrow’s bid for a third runway instead. Parliament is due to vote on whether to approve the expansion of Heathrow in the first half of next year.
GIP owns 42% of Gatwick, alongside infrastructure investors from Abu Dhabi, California, South Korea and Australia. Rather than an outright sale of Gatwick, the private equity giant could opt to reduce its stake while maintaining a lucrative management role.
Edinburgh airport might fetch as much as £2bn, said investment bankers. GIP bought the airport from BAA for £807m in 2012, beating competition from JP Morgan Asset Management.
GIP declined to comment.
London City airport sold to Canadian Pension funds, for £2 billion (bought by GIP in 2006 for £760 million)
February 26, 2016
A Canadian-led consortium of pension funds has beaten rivals to buy London City airport, from GIP, which paid £760 million for it. So that is a hefty profit. The valuation has proved controversial because the largest airline at City airport, BA, threatened to pull most of its aircraft out of the airport if the new owner raised airline charges to cover the high sale price. Willie Walsh, CEO of BA’s owner IAG, considers £2 billion a foolish price. GIP owns 75% of the airport, and Oaktree Capital own 25%. The consortium that has bought the airport is led by the Ontario Teachers’ pension fund. It includes Borealis Infrastructure, which manages funds for one of Canada’s largest pension funds, and also Japanese pension funds. The consortium also includes AimCo and Kuwait’s Wren House Infrastructure Management, which is an investment vehicle owned by the Kuwait Investment Authority. The Canadian Teachers’ pension fund has $160bn in assets, and already owns 4 airports (share of Birmingham, Bristol, Brussels and Copenhagen). HS1 Ltd is jointly owned by Borealis Infrastructure and Ontario Teachers Pension Plan, both Canadian pension funds. GIP bought the airport for an estimated £750m in 2006 from Dermot Desmond, the Irish financier, who paid just £23.5m for it in 1995 from Mowlem.