Gatwick, EPF teaming up to buy stake in Malaysia Airports

09 July 2019 - 12:00 am UTC

UK-based airport operator Gatwick Airport is teaming up with Malaysia’s Employees Provident Fund to acquire a strategic stake in Malaysia Airports Holdings, two sources familiar with the situation said.


The stake is around 20%, the sources told Inframation sister publication Mergermarket. Gatwick and EPF are looking to form a consortium to acquire the stake from Malaysian sovereign fund Khazanah Nasional via a special purpose vehicle, they added.


Khazanah currently owns 33.2% of Malaysia Airports, valued at MYR 4.78bn (USD 1.19bn) based on its market capitalisation of MYR 14.4bn.


Shares of the airport operator are currently trading at MYR 8.71, or 33.4x PE. They have jumped 14.3% in the past one month, but have been largely unchanged in the last 12 months with an increase of 1.4%.


Post disposal, Khazanah will remain a minority shareholder and the process will not trigger any general offer, both sources said. EPF, a state-owned retirement fund, currently holds a 10.66% stake in Malaysia Airports, as per its 2018 annual report.


Malaysia Airports, Gatwick, EPF and Khazanah did not reply to requests for comments.


The sovereign wealth fund has been looking to divest its portfolio companies and has recently sold down shares in hospital group IHH Healthcare and Singapore-based telco operator M1. This is part of its wider strategy realignment following the change in Malaysia’s federal government in May last year, as reported by local media.


While airports can be considered strategic assets for the country – hence the need to rope in a local partner – the sovereign fund is looking at strategic tie-ups through which it can pare its stake in these companies to partners that can manage them and increase their profitability and, therefore, their value, said the second source familiar.


Malaysia Airports operates 20 airports in Malaysia, including the main KLIA International Airport, as well as Sabiha Gocken International Airport in Istanbul, Turkey.


Gatwick, which is majority owned by French airport operator VINCI Airports and backed by infrastructure-focused PE firm Global Infrastructure Partners (GIP), operates the UK’s second-largest airport, Gatwick international Airport in West Sussex, London.


VINCI Airports has a 50.01% stake in the airport operator while GIP holds the remaining 49.99%, as per its website.


Vinci and GIP did not reply to requests for comment.


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