EMEA: Major UK airport stake up for sale

23 February 2018 - 12:00 am UTC

Ardian’s infrastructure investment arm is exploring the sale of shares in a company that operates the London Luton Airport concession, sources said.

The French fund manager, which owns a 49% stake in the fifth busiest airport in the UK, has appointed HSBC as its advisor on the sale, two sources with knowledge of the process said.

Ardian and Spanish airports operator AENA, which owns 51%, bought the concession for Luton Airport for GBP 394.4m in 2013. The concession is due to expire in 2031.

Ardian holds its stake via AXA Infrastructure Fund III, which reached final close in 2013 at EUR 1.45bn.

Interested infrastructure investors have already been in touch with advisors regarding the asset, sources said.

Ardian may attempt to keep a management role, one source said. Inframation reported earlier this month that Global Infrastructure Partners was considering selling its 42% stake in Gatwick Airport to existing investors and LPs to maintain its management role in the asset.

Luton Airport, the fourth busiest in the London area by passenger numbers, is majority-owned by Luton Borough Council.

Luton is unusual among major UK airports in that it is operated as a concession. The concession company, London Luton Airport Operations, in its last full year results for 2016 reported EBITDA of GBP 55.1m, up from GBP 50m the previous year, on revenue up to GBP 162.9m from GBP 147m.

Ardian’s stake in the concession company, London Luton Airport Operations, could attract a high price despite being operated as a concession.

Italian investor Atlantia paid EUR 1.8bn for 64% of a concession that operates Nice Airport, equivalent to a multiple of 27 times EBITDA, much higher than historic multiples for airports.

In 2016, GIP sold London City Airport for around GBP 2bn in 2016, which was thought to value the airport at 28 times EBITDA. Unlike Luton Airport, London City is not operated as a concession. GIP is also thought to be considering a sale of Edinburgh Airport.

Other recent UK airport deals include sales last year of Bournemouth Airport to conglomerate Rigby Group and of Leeds-Bradford Airport to infrastructure investor AMP Capital for undisclosed fees.

Ardian agreed to sell LP commitments in AXA Infrastructure Fund II to APG and AXA in December. Ardian will continue to manage the fund’s portfolio on behalf of the new owners.

Ardian and HSBC declined to comment.