Glasgow is set to launch an audacious bid to buy the city’s airport. The city council’s pension fund – the Strathclyde Pension Fund – is part of a bid consortium which includes Partners Group and Zurich Airport.
Partners Group is a global private markets investment management firm with more than 30 billion Euros in investment programmes under management in private equity, private debt, private real estate and private infrastructure.
Spanish firm Ferrovial is also keen on snapping up Glasgow. It owns London Heathrow Airport as well as 25% of Heathrow Airport Holdings, which owns Glasgow, Aberdeen and Southampton Airports.
A decision by the Strathclyde Pension Fund group to try and buy Glasgow could spark a bidding war.
Insiders say the consortium regard the West of Scotland airport as a good investment.
The move to buy Glasgow is supported by city council leader Gordon Matheson and Renfrewshire council leader Mark Macmillan.
They regard the airport as a vitally important asset to the West of Scotland in general but to Glasgow and Renfrewshire in particular.
If their bid was successful, public involvement in a takeover for Glasgow would place it in direct competition with Prestwick, which was acquired by the Scottish Government last year. That could mean a political conflict between Labour-run Glasgow and the SNP administration at Holyrood.
Strathclyde Pension Fund has assets of £13.5bn, making it the wealthiest council pension fund in the UK. Its members include the 12 local authorities which made up the former Strathclyde Regional Council.
However, the fund has around 200,000 members including present and former council staff and a number of private companies like bus giant First.
The pension fund has spread its investments across a wide range of areas and has a stake in some of the biggest companies in the world including Samsung and Apple.
It also has a property portfolio which includes a Wolverhampton shopping centre and an office block in Hong Kong.
Glasgow Airport was owned by the former Glasgow Corporation but in 1975 an agreement was reached to transfer its ownership to the British Airports Authority.
Manchester Airport is one of only a few airports in the UK still in the ownership of local councils. It is owned and managed by Manchester Airports Group, a holding company owned by the 10 metropolitan councils of Greater Manchester.
Last year, the consortium decided to buy Stansted Airport and 35.5% of the group went to Australian investment fund Industry Funds Management.
In the battle to win the bid, pension fund managers face a major battle in their attempts to wrestle control of the west coast hub.
They could be caught up in a bidding war after Madrid-based Ferrovial reportedly tabled an opening offer of £800million earlier this week for Glasgow and the airports at Aberdeen and Southampton.
Ferrovial is the world’s largest transportation infrastructure company and is cash rich. Technically, it already owns Glasgow which is part of Heathrow Airport Holdings (HAH) which also owns the other two airports.
The Spanish firm have a 25% stake in HAH and is its biggest single shareholder. But it’s looking to expand business interests in the UK and reports suggest it wants outright control of Glasgow Airport and the others.
Ferrovial took control of what was BAA in June, 2006, at a time when officials in Glasgow were celebrating the hub’s 40th anniversary.
The Spanish conglomerate has so far refused to comment on reports of a bid although sources insist the speculation is true. That would suggest Glasgow Airport could shortly be the centre of a bidding war and if the price is right analysts say the Spaniards will withdraw and approve a deal.
The sale price for Glasgow is likely to generate a lot of haggling. Edinburgh Airport, which snatched Glasgow’s crown as Scotland’s busiest airport years ago was sold off recently. The agreed price was £800m.
It’s thought likely that Ferrovial executives could be looking for something similar if they opt to drop their interest in having outright control to a new position of a sell-off.
Council supports multimillion-pound bid for Glasgow Airport
COUNCIL and business leaders have backed plans for a multi-million takeover bid for Glasgow Airport by a group including the city’s £13.5billion pension fund.
Representatives of a possible bid have expressed interest to Heathrow Airport Holdings in buying the airport and would like guidance on how to initiate a bid of around £500 million.
Councillor Gordon Matheson said: “Glasgow Airport has huge strategic importance for our city and also the wider regional and national economies.
“It is Scotland’s principal long-haul gateway and has an extensive schedule of European and domestic flights including vital routes to the Scottish islands.”
Councillor Matheson said the bid brought together strong “regional interest” and strategic management skills. It also offered the “best possible opportunity to meet the needs of local business and leisure travellers.”
Renfrewshire Council leader Mark Macmillan said it was encouraging to see such interest in the airport as a key point for jobs, investment and economic growth in the area.
He said: “I believe the combination of locally-based involvement backed by international investment and financial expertise would be ideally placed to meet and benefit from our region’s economic interests and maximise the growth potential for investors.”
Glasgow Chamber of Commerce chief Stuart Patrick insisted he would welcome investment that grows the business.
He said: “Glasgow Airport is the most important transport asset the city has for business to access markets abroad.
“The management team has been doing an excellent job in growing it over the last three years and we support any owners who can provide investment funding that will maintain that growth.
“Clearly the two councils understand the importance of the airport but naturally the consortium will be making its decision on investment returns.”
Only when due diligence is completed will a bid be tabled.
The move to purchase the airport is to be made by major investors including the Strathclyde Pension Fund. The pension fund has £13.5billion of assets and the consortium will be led by Swiss-based Partners Group, a global private markets investment management firm that masterminds more than €30bn of investments.
A spokesman for the Partners Group said: “We can confirm we are in the process but can’t give you any information regarding the timing.”
Comment from an AirportWatch member:
I’m wary of taking too much comfort from this rumour: even if the AENA privatisation fails (and Lord knows, the Spanish government needs the cash), AENA is the junior partner in a two-organisation partnership: the other being AXA, which has very deep pockets indeed.
Ferrovial makes bid to buy Aberdeen, Glasgow & Southampton airports – hoping to make more profit than at Heathrow
February 18, 2014
Ferrovial had made an offer – for an undisclosed amount – to buy Aberdeen, Glasgow and Southampton airports from its partners in Heathrow Airport Holdings. The price might be as much as £800 million. Ferrovial is the largest shareholder in Heathrow, with 25%. Heathrow Holdings has made it clear for sometime that it is eager to sell its other remaining airports. It is understood that Ferrovial is not making the offer in partnership with any other company, though some reports suggest that Australian infrastructure companies Macquarie and Industry Funds Management are also involved. It is not known if Ferrovial’s bid will be accepted. A Portuguese bank has valued the 3 airports at £952m using an equity value/earnings before interest, tax, depreciation and amortisation of 12.3 times for Aberdeen and Glasgow and 10.7 times for Southampton. Ferrovial bought BAA in 2006 for £10.3bn. It has since offloaded Gatwick, Stansted and Edinburgh in order to lower its debt. Now it is keen to buy again. Ferrovial hopes UK regional airports will grow strongly for the next few years, if the UK economy starts to grow, as they have a large amount of unused capacity. By contrast, the CAA has limited the amount Heathrow can charge airlines for landing charges, so decreasing the return available from Heathrow. Click here to view full story…
Speculation that GIP, Ferrovial and MAG interested in buying Aberdeen Glasgow and/or Southampton airports
November 13, 2013 Sky News has learned “from banking sources” that various infrastructure investors are interested in buying Aberdeen, Glasgow and Southampton airports – amid expectations that their owner, Heathrow Holdings, will opt to sell them – to focus on its ownership of Heathrow. It is understood that Heathrow is considering a plan to offload, following a string of unsolicited approaches from prospective buyers. Global Infrastructure Partners (GIP) which owns Gatwick and City airports, has expressed an interest in buying Aberdeen airport, although it has not yet made a formal bid. A number of Heathrow’s shareholders and board members are said to be keen to dispose of the 3 regional airports but its board has not yet made a formal decision. Ferrovial now only owns 25% of Heathrow,and is reported as now likely to be interested in buying one or more of the airports, through a separate vehicle. MAG is also understood to want to buy one or more of them. Click here to view full story…