Investors hovering

Scottish airports likely to be sold in new year

Edinburgh airport
Edinburgh Airport is among those expected to be sold

Scotland’s airports are tipped to invite bidders next year as values rise following a recovery of traffic since the pandemic.

Spanish infrastructure giant Ferrovial revealed a near $3 billion deal to sell its 25% stake in Britain’s busiest airport Heathrow on Tuesday, prompting talk of other airport disposals across Europe, according to the news agency Reuters.

“There are green shoots of airports investments coming back to the market as post-Covid passenger demand recovers and also as a result of a sharp increase in underlying cost of debt”, said Andras Kranicz, head of infrastructure finance, EMEA at BNP Paribas.

“This has encouraged infrastructure equity investors away from highly regulated asset classes with relatively low achievable equity returns towards those which are more volatile, representing higher demand risk exposure and hence higher achievable returns,” he added.

Among the largest of the airports that may see a change of ownership as soon as 2024, is Edinburgh whose US-based owner Global Infrastructure Partners (GIP) is working on the sale of its majority stake in a process that may value the airport at over €2.5 billion. GIP declined to comment.

AGS Airports, which oversees operations at Aberdeen, Glasgow, and Southampton airports and is owned by Australia’s Macquarie and Spain’s Ferrovial, is also said to be up for grabs. Ferrovial and Macquarie declined to comment.

Agata Lyznik, spokesperson for trade association the Airports Council International (ACI) World, said: “Airports as an asset class are now deemed more risky, given the unprecedented impact the pandemic has wrought on the aviation industry.”

That means for some investors who have owned these assets for many years, now is the right time to sell out. Investors such as Macquarie and GIP bought their stakes in European airports almost a decade ago and are now reaching the end of their usual investment holding period.

Next year is expected to be a milestone for global passenger traffic as figures reach 9.4 billion in 2024, surpassing the 9.2 billion passengers prior to the pandemic in 2019, according to ACI.

Valuations that bidders might pay for airports are expected to be far lower than the 20 times earnings before interest, tax, depreciation and amortization (EBITDA) multiple paid for Gatwick airport in 2018, the sources said.

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