At least three consortiums have been formed to launch multi-billion-euro bids for a stake in the operator of Paris Charles de Gaulle and Orly airports, among the first of France’s planned privatisations for 2019, three financial sources said.
The French state’s 50.6 percent stake in airports group Aéroports de Paris (ADP) is likely to go on the block next year in a deal that could be worth up to 10 billion euros (US$11.4 billion), based on the current market capitalisation.
This privatisation is part of President Emmanuel Macron’s plan to help to finance a 10 billion euro government fund aimed at supporting innovation projects. For now ADP, energy group Engie and lottery monopoly FDJ are the main companies targeted.
Three consortiums have been forming, people close to the matter said, identifying the lead player in each as U.S.-based fund Global Infrastructure Partners, French group Vinci and Australian fund IFM.
Milan-listed Atlantia has also been considering taking part in the ADP auction at the helm of a fourth consortium. However, such a plan could be thwarted by this week’s collapse of a motorway bridge in Genoa, which left 38 people dead, bankers and analysts said.
Atlantia may lack the funds if Italy imposes punitive measures against its Autostrade unit, operator of the collapsed bridge, and the group’s management could be too wrapped up in the Genoa aftermath to deal with new distractions.
“Atlantia is 100 percent focused on handling the Genoa crisis,” a source familiar with the matter said. “I can’t see them investing any resources into a new bidding process.”
Francesco Lamanna, of financial analysis website Investing.com, agreed.“The hostile position of politics, in my opinion, suggests that they should be calm at least a little while before someone takes new initiatives…In short, I think it is the least favourable moment for Atlantia to take a step forward,” he said.
Reuters reported in June that Vinci, which already holds an 8 percent stake and has made airport operation a core business, had approached pension funds to become partners, given the potential size of the asset. It is unclear whether any fund has created a joint venture with Vinci.
The companies declined to comment or were not immediately available for comment.
One of the sources said that at least a dozen consortiums will participate in the first round of the auction, adding that each is expected to include one airport specialist or a that already has an airport portfolio.
Global infrastructure investors, Canadian and U.S. pension funds, large European insurers and Middle Eastern funds are also expected to bid, some as part of larger consortiums, the sources said.
European airports have achieved solid investor returns in recent years as they have benefited from increasing global travel and a rise in consumer spending at airport retail outlets, on-site hotels and car parking.
France’s lower house of parliament was due to begin debate next month on the law to implement ADP’s privatisation, with a view to adopting it by the end of the year or early 2019. That timetable could yet slip, however, as other Macron reform plans vie for attention.
ADP owns its assets outright but the new law envisions the company being given a 70-year concession to operate them, with the state having the right to veto the sale of ADP assets, which are primarily real estate.
The government should have no major issues passing the bill, with Macron’s party holding a majority in the lower house, though some opposition parties have criticised the plans.
The International Air Transport Association (IATA), an industry lobby group, said in June that the length of the proposed concession reduces flexibility to adapt to charging market conditions. IATA also took issue with the planned charging system, having long argued that revenue from airport retail activities should be used to cut charges to airlines.
Update: Vinci approached Canada Pension Plan Investment Board, Ontario Municipal Employees Retirement System, Ontario Teachers’ Pension Plan and other pension funds to become bid partners, Reuters reported in June.
By Clara Denina and Arno Schuetze
(Additional reporting by Sarah White, Pamela Barbaglia, Andres Gonzalez, Dasha Afanasieva and Valentina Za Editing by David Goodman)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)