Gatwick airport: majority stake 50.01% sold to French group Vinci; partners retain 49.99%. GIP continues to manage it
Date added: 29 December, 2018
New owner says Brexit threat helped Vinci get 50.01% stake in UK’s second-busiest airport for ‘reasonable’ £2.9bn. A consortium led by the US investment fund Global Infrastructure Partners (GIP) is selling a majority stake of 50.01% in the airport to Vinci Airports, one of the world’s top airport operators and part of the infrastructure group Vinci. Vinci and GIP will manage Gatwick together. Gatwick will be the largest in Vinci’s portfolio of 46 airports spread across 12 countries. The French group’s network includes Lyon-Saint-Exupéry airport, Nantes Atlantique and Grenoble Alpes Isère in France; Lisbon and Porto in Portugal, Funchal in Madeira, and Osaka Itami and Kansai International in Japan. The GIP-led consortium bought Gatwick from the airport operator BAA for £1.5bn in 2009 and spent £1.9bn modernising the airport in subsequent years. The shareholders are selling down their stakes, leaving GIP with 21%, the Abu Dhabi Investment Authority with 7.9%, Australia’s sovereign wealth fund with 8.6% and two public pension funds in California and South Korea with 6.4% and 6% respectively.
France’s Vinci Airports is taking a controlling stake in Gatwick for £2.9bn, a week after the UK’s second-biggest airport was brought to a standstill by a series of drone sightings.
A consortium led by the US investment fund Global Infrastructure Partners (GIP) is selling a majority stake of 50.01% in the airport to Vinci Airports, one of the world’s top airport operators and part of the infrastructure group Vinci. Vinci and GIP will manage Gatwick together.
Gatwick will be the largest in Vinci’s portfolio of 46 airports spread across 12 countries. The French group’s network includes Lyon-Saint-Exupéry airport, Nantes Atlantique and Grenoble Alpes Isère in France; Lisbon and Porto in Portugal, Funchal in Madeira, and Osaka Itami and Kansai International in Japan.
Gatwick’s chair, Sir David Higgins, said the deal was a “vote of confidence in Gatwick and its future potential”. He will stay on, along with the chief executive, Stewart Wingate, who said there would be no changes to the immediate running of the airport. Gatwick employs about 3,000 people and the deal is not expected to have any impact on jobs.
Wingate said: “This is good news for the airport as it will mean both continuity but also further investment for passengers over the coming years to improve our services further.”
The GIP-led consortium bought Gatwick from the airport operator BAA for £1.5bn in 2009 and spent £1.9bn modernising the airport in subsequent years. The shareholders are selling down their stakes, leaving GIP with 21%, the Abu Dhabi Investment Authority with 7.9%, Australia’s sovereign wealth fund with 8.6% and two public pension funds in California and South Korea with 6.4% and 6% respectively.
Notebaert brushed aside concerns over the impact of Brexit, stressing that London was the world’s biggest city for airport travel, ahead of New York.
Gatwick operates the busiest single runway in the world and serves 228 destinations in 74 countries. The airport’s new owner vowed to push ahead with a planned 15-year investment programme, including widening its emergency runway and bringing it into daily use as a second runway.
If, following a public consultation that runs until 10 January, Gatwick pushes ahead and obtains planning permission, the runway could potentially be open by 2025 – before Heathrow’s third runway. With two runways Gatwick could serve up to 70 million passengers a year – almost as many as Heathrow today (78 million).
Even without this, Gatwick expects to grow to 60 million passengers a year, by flying more and larger planes on its existing runway.
Last year, the airport handled nearly 46 million passengers, up from 32 million at the time of its previous sale a decade ago, when BAA, owned by the Spanish infrastructure group Ferrovial, was ordered by the CompetitionCommission to sell Gatwick amid concerns over its dominance of the airport market. The deal ended BAA’s four-decade long monopoly over the capital’s major airports.
Gatwick reported revenues of £764.2m for the year to 31 March, and earnings before interest, tax, depreciation and amortisation of £411.2m.
Global Infrastructure Partners doubles its money on Gatwick sale
Infrastructure fund manager makes a packet on UK’s second-busiest airport
Mark Cobley
Global Infrastructure Partners, a $51bn fund manager behind Edinburgh Airport and the Port of Melbourne, has sold part of its stake in Gatwick Airport at a price that suggests it has more or less doubled its money since 2009.
GIP and its consortium partners, which include Abu Dhabi’s sovereign wealth fund and California’s state pension fund, have sold a 50.01% interest in Gatwick to the French operator Vinci Airports for £2.9bn, it announced on December 27.
The sellers will retain 49.99%, and GIP will continue to manage the UK’s second-largest airport in partnership with Vinci.
GIP, which controls $51bn in infrastructure funds, acquired Gatwick in 2009 for £1.46bn, and subsequently sold a series of minority stakes to a quartet of sovereign wealth funds and state pension funds, which left it with a 42% stake.
Prior to today’s deal, the Abu Dhabi Investment Authority held 15.9% of the airport; the California Public Employees’ Retirement System owned 12.8%; Korea’s National Pension Service had a 12.1% stake and Australia’s Future Fund held 17.2%.
Each of the sellers has reduced their stake by half, meaning GIP has sold about 21% of the company — a stake valued at around £1.2bn. That is roughly double the £611m that 42% of the company would have been worth in 2009.
GIP declined to comment on its financial returns from the deal, which is expected to close by the end of June 2019. The firm and its partners have agreed to reinvest £30m in Gatwick.
GIP, founded in 2006 by a group of former Credit Suisse bankers and GE infrastructure executives, last year raised one of the largest infrastructure funds ever at $15.8bn, and holds stakes in Edinburgh Airport and the Hornsea 1 wind farm, the UK’s largest offshore wind-power facility.
Announcing the deal, Stewart Wingate, the chief executive of Gatwick’s operating company said he and his senior management team will stay on under its terms.
He said: “There will be no changes to the immediate running of Gatwick and we expect the transaction to complete by the middle of next year.”
Wingate also said the airport had taken “a number of important steps in recent days” to help prevent any recurrence of the significant disruption the airport suffered last week, when numerous reports suggested drones were being flown close to the airport.
Wingate added: “I know this unprecedented criminal activity caused huge inconvenience to thousands of people — many of whom missed important family events in the run up to Christmas. We have appreciated the understanding and tolerance shown.”
In a parallel statement on the deal, Nicolas Notebaert, president of Vinci Airports, pledged that the firm would “support and encourage growth of traffic”, help improve Gatwick’s “operational efficiency” and use its “international expertise in the development of commercial activities” to drive improvements in the airport’s bottom line.
