Kuwaitis part of $3bn bid to buy London City Airport
An international consortium of sovereign wealth and pensions funds, including a London-based division of the Kuwait Investment Authority (KIA), is lining up a bid to buy London City Airport for $3 billion, according to media reports.
Wren Infrastructure Management, a London-based division of the KIA, is part of a consortium that is lining up a bid for the airport located in the heart of the English capital.
Canadian giant Ontario Teachers’ Pension Plan and investment fund manager Hermes have joined up to lodge a bid for airport, according to a report the Telegraph.
The trio will reportedly face opposition from a group led by Australian financial firm Macquarie, who are believed to have lined up a rival bid.
Earlier this week, Reuters reported that London City Airport’s owners picked Credit Suisse to advise them on a potential sale that could value the business at as much as $3 billion, two sources close to the deal said on Monday.
City Airport, a favourite among executives for its convenient location near London’s two financial districts, could be sold as soon as this year, said the people, who could not be named because the matter is confidential.
The airport is majority-owned by Global Infrastructure Partners (GIP), an investment fund that also backs Gatwick and Edinburgh airports.Credit Suisse and GIP declined to comment. Headquartered in New York, GIP was founded in 2006 by Credit Suisse, General Electric Co and its management team to focus on infrastructure investments globally.
GIP bought City Airport for $1.1 million in 2006 and holds 75%. Oaktree Capital Management holds the rest.
A spokesman at Oaktree declined to comment.
Both owners have agreed to the disposal and held talks with investment banks in recent weeks to appoint advisers, the sources said.
The business is expected to draw interest from infrastructure funds, industry sources said, noting that other airport operators are also possible buyers.
Infrastructure assets have attracted high valuations because of their stable returns and long-term growth prospects; attributes that have helped to increase activity in the sector.
France approved the privatisations of Lyon and Nice airports this year, having last year sold half of Toulouse Blagnac airport to a Chinese-led consortium.
City Airport, located about three miles from the Canary Wharf financial district to the east of the city, catered for about 3.6 million passengers last year. It aims to serve 6 million a year by 2023.
The airport had core earnings (EBITDA) of $71.8 million (45.8 million pounds) in 2014, up 9.3 percent on 2013. One issue for any buyer is that London mayor Boris Johnson in March rejected a $314 million (200 million pound) expansion plan over noise concerns.
The airport is appealing the decision.