I hope this finds you well. As I am sure you will know by now, GAD 2014 will take place in Athens from 17-20 November this year, putting us on the spot for two of the most exciting airport transactions in the pipeline at the moment – Athens International Airport and the two groups of Greek regional airports. Combined with the prospect of some winter sunshine for those of us escaping northern climates, it promises to be a great setting for this year’s meeting.
As I sit down to write the draft agenda for GAD 2014, I wanted to take a few minutes to share some of the key takeaways from my research with you. As usual, my colleague Ian Law and I have spent the first few weeks of the process speaking to 100+ of the leading lights of the industry to find out what we should be talking about at GAD come November. Here are some of the highlights! Today’s instalment, based on conversations with 50+ airport investors, will focus on the global deal pipeline and a second (to follow) will look at some of the priorities and challenges raised by airport CEOs.
Europe
In southern Europe, the aforementioned opportunities in Greece are attracting the most interest, so all eyes are on the Hellenic Republic Asset Development Fund for more details and shortlists to emerge. For both Athens International Airport and the two groups of Greek regional airports, interested parties stated that understanding Greek growth trends will be key to getting the business plan right. The regional airports also have their own idiosyncrasies, presenting both challenges and opportunities to the incoming operator.
AENA would also, of course, be a huge and long awaited deal – if the mooted IPO goes ahead. Speaking of deals that have been talked about year after year at GAD, might we see the first privatisation of a French regional airport (Toulouse) this year? Italy is lively at the moment, with Atlantia’s acquisition of AdR, Corporacion America’s acquisition of Florence and Pisa airports, the move to a new airport system in north east Italy and a handful of smaller sales on the cards. To the east, Ljubljana is of high interest. Lithuania is also in the process of creating a national airport system with a view to privatisation, although it is not yet clear what form this will take. The refinancing of Budapest Airport (with its challenges of historic over-leverage), due to be completed this year, is an important event. Russia remains a high growth market and the restructuring of the Moscow airports’ shareholding goes on, but recent events will have done nothing to allay concerns about political risk. Meanwhile, in London, the Davies Commission continues its work ahead of its final report in 2015. Anyone travelling on public transport or reading a London newspaper can’t fail to have seen the ‘Gatwick Obviously’ campaign. One big question for the European market in the next few years is whether the move to long term capital will see the transaction pipeline slow down significantly in the long term. Let’s hope not – it would make for a boring conference!
Asia & MENA
Outside Europe, most eyes are on Japan as the privatisation of New Kansai International Airport Company oves forward and the process looks like it will be very competitive. Here interested parties stated that understanding the vendor’s requirements is their top priority.
India is also exciting, with the new Mumbai airport and further privatisation of mid-size airports coming up after the election, although doing business in this market is recognised as a challenge.
Turkey also continues to boom, but talk around the new Istanbul airport has gone quiet in the face of political tensions and the difficulties in financing such large greenfield projects.
South-east Asia is also a region that has been talked about at GAD for many years, so it is good to see that the legal dispute of Cebu has been settled. Meanwhile authorities in Vietnam have approved a plan to privatise the country's airport authority.
Also for the adventurous airport operator, there are rumblings of opportunities in the MENA region from Morocco to Pakistan.
The Americas
In the Americas, the reconcession of Santiago is understandably gaining the most interest this year and, like Japan, the process will be very competitive. However, interest in Brazil has noticeably cooled. Decisions regarding the third round of privatisations are on hold until after the election – we may or may not know when this will happen and which airports will be included by the end of the year. However, these assets will be much smaller than the transactions we have seen in the last two years and some international players may not participate after the experience of the first two rounds. This summer will, of course, see the World Cup come to Brazil, so we will see how the newly privatised airports perform! There are also some smaller assets in Colombia and Peru and the rumblings about a new airport for Mexico City go on.
In North America, La Guardia is well underway and we should know the winner before November. However, following the collapse of the Chicago Midway transaction just before GAD last year, further privatisations seem to be once again on the backburner, although the general sentiment still seems to be that there will be widespread privatisation within the next decade.
What's on the agenda at GAD 2014?
With a slow pipeline, high prices and squeezed yields in Europe, another big question for the coming years has to be the search for yield, so we can expect to continue seeing opportunities in emerging markets on the agenda at GAD. The round up above is certainly not meant to be to be comprehensive, so, despite what may be on the surface a slower pipeline, there is no shortage of things to talk about in Athens in November and we look forward to seeing you there.
In the meantime, have a lovely summer!
To register to attend the GAD 2014 conference, please visit www.icbi-gad.com
To register to attend the GAD 2014 conference, please visit www.icbi-gad.com
