London’s Gatwick Airport sold for $3.7bn to France’s Vinci
December 27 2018 06:39 PM
Gatwick airport surrounded by snow in West Sussex
Gatwick airport surrounded by snow in West Sussex

Bloomberg/London

Vinci SA agreed to acquire control of Gatwick Airport for £2.9bn ($3.7bn) as the French construction company jumped on the chance to add a major London hub to its aviation portfolio.

The purchase of the 50.01% stake in London’s second-busiest airport from a group of investors including sovereign wealth funds from Abu Dhabi and Australia will be completed in the first half of 2019, Vinci said on Thursday.

Existing shareholder Global Infrastructure Partners will manage the remaining holding.

With 45.7mn passengers in 2018, Gatwick will become the largest single airport in Vinci’s global network.

Gatwick has been under pressure due to intensifying competition from London’s other airports and lost out to Heathrow, Europe’s busiest hub, in a contest to win government backing for the construction of a new runway.

Its operations descended into chaos just before Christmas after drones were spotted around the runway led to a prolonged shutdown.

The 120-year-old engineering company is shrugging off risks surrounding Britain’s looming exit from the European Union, as rival airports warn demand for air-travel could be dented.

Manchester Airports Group, operator of rival London hub Stansted, sees the current Brexit plan trimming passenger numbers over the next five years but doesn’t expect it to halt growth entirely.

Like Stansted, Gatwick is targeting more long-haul flights.

“Airports are attractive investments, especially in a world of high volatility, because airport returns can be quite predictable and manageable even if passenger numbers are volatile,” Bernstein analyst Daniel Roeska said by phone. “In any Brexit scenario, people will still go on holiday.

In the long term it won’t be impacted that much on the leisure side.”

Vinci shares gained 0.5% in Paris as of 10:53am. They have fallen 17% this year for a market value of €42.1bn ($48bn).

Gatwick has outlined £1.11bn in investment plans to expand the capacity of its two terminals in the next five years.

It’s already the world’s busiest single-runway hub, the biggest base for discount carrier EasyJet Plc and the focus for long-haul leisure flights at British Airways.

The sale values Gatwick at 19 times 2019 earnings before interest, taxes, depreciation and amortization and can be considered low, Vinci airports head Nicolas Notebaert said on a call with journalists.

Brexit risks were factored into the price, he said.

While the price is broadly in line with recent deals in the industry, it’s on the pricey end given the uncertainty around Brexit, according to Vittorio Carelli, an analyst at Grupo Santander.

“I would have preferred to see a multiple closer to 17 or 18 times,” said Carelli.

Gatwick’s plan to put its standby runway in full operation may increase the number of passengers the airport can service, he said.

Global Infrastructure Partners, which manages more than $40bn in assets from ports and airports to a vast wind farm in the North Sea, bought London’s second-busiest airport with the consortium of investors in 2009 for about £1.5bn.

Gatwick reported earnings of £411.2mn in the fiscal year through March, on revenue of £764.2mn.

Vinci manages about 35 airports, in countries including Japan, Brazil, France and Cambodia.

The company also operates toll roads and a construction business.

Last updated: December 27 2018 07:38 PM


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