Skift Take

BAA's reluctance to sell its stake in order for the London market to remain competitive is a strong argument in favor of forcing the group to divest.

Source: Bloomberg
Author: Chris Jasper

South Korea’s Incheon International Airport Corp. may be among bidders for London’s Stansted terminal should owner BAA Ltd. be thwarted in its attempts to halt a sale ordered by U.K. antitrust regulators.

Incheon, which earlier this year made a failed approach for BAA’s Edinburgh airport in Scotland, is monitoring the Stansted situation with a view to making an offer should the asset become available, aviation marketing director Tae-Soo Yuh said.

“We lost out on Edinburgh, but we’d be interested in Stansted and we have a bid team that’s watching the situation,” Yuh said yesterday in an interview in London. “We’re looking at opportunities in Europe, Southeast Asia and around the world.”

BAA Chief Executive Officer Colin Matthews told Bloomberg News that he’s still hopeful of retaining Stansted in an appeal against a forced breakup, and that the company has taken no steps toward a disposal. An Incheon bid might face competition from Manchester Airports Group, owner of Britain’s busiest airport outside London, which is continuing with efforts to secure outside investment as it seeks to add another “major asset” to its portfolio, CEO Charlie Cornish said yesterday.

BAA’s Edinburgh terminal was sold to U.S. buyout firm Global Infrastructure Partners Ltd. for 807 million pounds ($1.26 billion) in April, joining a portfolio including London’s Gatwick hub, bought from BAA in 2009, and the U.K. capital’s City airport, located close to the main financial district.

JPMorgan Chase & Co.’s infrastructure unit, allied with Incheon, was the other bidder at the end of the tender process, two people familiar with the sale said at the time. Yuh didn’t say whether a Stansted bid would involve a financial partner.

Manchester Interest

Cornish said last year that Manchester Airports would look at Stansted should it become available, and the company, which is owned by 10 local authorities, stated on Feb. 15 that it was exploring an opportunity to add “a quality airport” while seeking to bring in new investment to help fund a deal.

Cornish said yesterday that those aims remain, while declining to comment on Stansted.

Li Ka-Shing’s Cheung Kong Infrastructure Holdings Ltd. is interested in buying a stake in Manchester as Cornish seeks to raise as much as 1 billion pounds to fund a Stansted bid, as is Australia’s Industry Funds Management Pty., the Sunday Times reported June 24, without saying where it got the information. Abu Dhabi Investment Authority and partner 3i Infrastructure Plc are no longer seeking the 35 percent stake on offer, it said.

As the owner of London Gatwick, New York-based GIP wouldn’t be able to bid for Stansted, the biggest base for Ryanair Holdings Plc, Europe’s largest discount airline.

No Sale Yet

The auction of Gatwick fetched 1.51 billion pounds, while the purchase of BAA itself by Spanish builder Ferrovial SA in 2006 was valued at 10.1 billion pounds. Ferrovial agreed to sell a 5.9 percent stake to Alinda Capital Partners for 280 million pounds in October, valuing BAA at 4.76 billion pounds.

BAA CEO Matthews said in an interview yesterday that while there have been “historical expressions of interest” in Stansted, the company has taken no steps to market the asset.

“We haven’t started a sale,” he said, adding that BAA is bound by undertakings given to the U.K. Competition Commission, the terms of which would require it to give formal notification of the commencement of a disposal, spokesman Simon Baugh said.

Robert Crimes, an analyst at Credit Suisse Group AG in London, said in an investor note when the intention to sell Edinburgh was announced last October that Stansted would probably prove tougher to offload because the Scottish terminal, though smaller, is unregulated and offers higher returns.

–With assistance from Kyunghee Park in Singapore. Editors: Chad Thomas, Chris Reiter.

To contact the reporter on this story: Chris Jasper in London at [email protected]. To contact the editor responsible for this story: Chad Thomas at [email protected] 

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Tags: incheon, london

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