EMEA: Vinci gains US foothold with OMERS airports takeover

24 April 2018 - 12:00 am UTC

Vinci Airports has struck a deal to further expand its rapidly growing portfolio, this time making its first foray into the US in a deal favoured by analysts although criticised for a lacking of pricing information.

The Vinci Concessions subsidiary said on Tuesday (24 April) it has signed an agreement to acquire the portfolio of OMERS Infrastructure-owned Airports Worldwide, comprising a network of airports in the US, UK, Costa Rica and Sweden.

The main acquisition in the US is a concession expiring in 2039 to operate the Orlando-Sanford International Airport in Florida, which last year recorded 2.9m passengers.

Analysts said it is difficult to put a price on OMERS’ assets being sold because they comprise a mix of different contracts, including freehold ownership, concessions, management contracts and part management contracts.

Amsterdam-registered Airports Worldwide Cooperatief, the ultimate parent of the companies being sold, recorded revenues in 2016, the latest filings, of USD 107.3m (EUR 87.7m) and costs of airport operations of USD 80.9m (EUR 66.1m), resulting in a gross profit of USD 26.4m (EUR 21.6m) for the period. The company recorded a consolidated net loss before income tax of USD 13.8m (EUR 11.3m).  The company said in the same statement it would not pursue new acquisitions and would instead focus on more efficient management of the existing airport assets.

The key European airports being sold are Belfast International Airport, which recorded 5.8m passengers in 2017, and a 90.1% stake in Swedish airport operator Skavsta Airport near Stockholm, which recorded 2.1m passengers.

Belfast International Airport recorded for 2016 a turnover of GBP 34.8m and an operating profit of GBP 2.9m, compared with GBP 510,000 the year before. Post-tax profit for the year was GBP 1.9m, whilst the final figure attributable to the owners of the company was a loss of GBP 476,000.

The deal takes place as Vinci Airports continues its rapid expansion mission. Since 2012 it has grown from a relative minnow in the sector into one of the world’s airport-owning giants, having struck deals such as its acquisition of regional airport owner ANA in Portugal. In February it reported its EBITDA as being EUR 808m.

It also takes place as OMERS, the management arm of the pension plan for municipal employees of the Canadian province of Ontario, is divesting assets in order to help pay for new investments. Last year it sold its stake in High Speed 1 and acquired up to a 35% holding in Thames Water, later syndicating some equity to Japanese investors.

Vinci described the transaction as a “strategic” move into the US, as well as a way to strengthen its presence in Europe and Latin America.

For Natixis analyst Gregoire Thibault, the transaction “allows the group to gain a foothold in the US, a promising airport-facility market”.

Santander analyst Vittorio Carelli added that the deal is a first step “to eventually detect additional opportunities” in that market.

The deal – which is expected to close later this year – will see Vinci Airports’ network expanded to 45 airports across 11 countries, adding 25.6m passengers. As a result, when the deal closes, the Vinci Airport network will handle more than 182m passengers per year.

But there’s still limited visibility on the wider deal, given Vinci has not disclosed how much it is paying for these assets.

For Carelli, the announcement has a “mixed first reading”, because as a result of the expansion, the complexity of Vinci Airports is also increasing, “and this leads to a more complex exercise to properly evaluate the fair value of its perimeter”.

Thibault’s view is also that the announcement confirms the validity of Vinci’s airport strategy, but there’s also limited view due to the lack of details about the value of the transaction.

Vinci Airports is also acquiring a 48.75% stake in Juan Santamaria International Airport in San José and a 45% stake in Daniel Oduber Quiros International Airport in Liberia, which 6m passengers combined.

The deal further includes four full management contracts and three partial management contracts covering seven other US airports. The full management contracts are for Hollywood Burbank Airport (4.7m passengers) and Ontario International Airport (4.2m passengers) in California; and Macon Downtown Airport and Middle Georgia Regional Airport in Georgia. The three partial management contracts are for Atlantic City International Airport in New Jersey, Raleigh Durham International Airport in North Carolina, and part of the international terminal at the airport in Atlanta, the world’s largest airport in terms of traffic.

For 2017, Vinci Airports recorded 156.6m passengers, including all fully-consolidated airports and the equity-accounted companies held on January 1, 2017 and Salvador airport, but excluding Japan’s Kobe Airport and Serbia’s Belgrade Airport.

Earlier this month, Vinci Airports said that 1Q18 traffic increased by a further 11.6% YoY to 38.6m – with a strong growth recorded in Cambodia (+26.1%) and in Portugal, with Lisbon Airport’s passengers up by 15.9%.

In France, traffic increased at the 12 airport facilities managed by Vinci Airports by an overall 10.6%. Japan and Chile assets also recorded double-digit passenger growth. Only the Dominican Republic assets recorded a slight decrease due to the bankruptcy of airlines serving the airports.

Canada’s OMERS Infrastructure – Airports Worldwide majority owner – said in a separate statement that the transaction, due to close later this year, was supported by O’Melveny as legal adviser and Citi as financial adviser.

The Canadian investment manager first invested in Airports Worldwide in 2009. Co-investors Abertisand AENA sold their shares in the company – then named ADC & HAS Airports Worldwide – in 2013 for a total of EUR 284m.