Rival group enters battle for Stansted airport

A consortium led by an Australasian investment manager has emerged as an early rival to Manchester Airports Group in the £1bn battle for Stansted airport.

Morrison & Co, which operates out of New Zealand, Australia and Hong Kong, is heading a bid team that also includes the New Zealand Superannuation Fund and Infratil, a Wellington-based infrastructure investor.

Stansted was finally put on the block last month after a three-year legal fight by owner, BAA, which tried unsuccessfully to halt the forced sale of the airport demanded by the Competition Commission. BAA’s controlling shareholder, Ferrovial, is thought to have issued non-disclosure agreements last week to interested bidders, effectively kick-starting the process. The sale is being handled by Deutsche Bank and ING.

The interest of Infratil in Stansted has surprised some industry observers because it is currently trying to sell its two smaller British airports Glasgow Prestwick and Manston in Kent after a difficult foray into the UK aviation market. Infratil, which runs about £2.5bn of assets, has twice written down the airports in the past two years, with their carrying value almost halving from £70m to £36m today. The two airports lost around £6m last year.

Even so, Infratil is an experienced airport operator, with its interests including a 66pc stake in New Zealand’s Wellington Airport. Infratil’s operations at Prestwick have also enabled the company to develop a relationship with Ryanair the low-fare airline responsible for almost 70pc of Stansted’s traffic. The Morrison consortium is believed to have held early talks with Ryanair. The NZSF, which has more than £9bn assets, devotes about 9pc of the fund to infrastructure investment, spanning airports, transport, energy and oil.

The Morrison consortium faces early competition from the council-owned Manchester Airports Group, which is building up its firepower via a potential deal with Australia’s Industry Funds Management. The giant antipodean infrastructure investor, which has around £21bn under management, has agreed to inject about £1bn for a 35pc stake in the Manchester airport company on the condition it wins the bid for Stansted.

The Stansted auction, which may also attract interest from JP Morgan, Citi Infrastructure Partners and Morgan Stanley Infrastructure Partners, is complicated by the Government’s review of airport capacity in the south east, led by former Financial Services Authority chairman Sir Howard Davies. While there will be no decision on where to build a new runway before 2015, the recommendations of the Davies Commission could have a major impact on Stansted’s value.

Michael O’Leary, the Ryanair chief executive, can also influence how much BAA gets for Stansted. He has already expressed interest in taking a minority stake in any new owner of the airport as long as it agrees to lower both landing charges and the cost of building new facilities. Mr O’Leary has also attempted to drive down the price by declaring that any bid based on the airport’s £1.3bn regulated asset base the regulator’s proxy for its value is “artificial” and based on “Noddy land” economics.

telegraph.co.uk 22nd Sep 2012