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.


See earlier:

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.

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