Spanish lead City airport bid - Sunday Times - Times Online

Spanish lead City airport bid - Sunday Times - Times Online: Spanish lead City airport bid
Dominic O’Connell



THE Spanish may be about to tighten their grip on London’s airports. A consortium led by Sacyr Vallehermoso, a construction and infrastructure group, is tipped to be leading the bidding for London City airport, the Docklands hub loved by high-flying City bankers.
Earlier this year one of Sacyr Vallehermoso’s domestic rivals, the infrastructure group Ferrovial, led a consortium that bought BAA, the airports group that includes Heathrow, Gatwick and Stansted.



The Sacyr Vallehermoso team, which includes the insurance giant Axa and banking group HSBC, is understood to be one of two bidders still in the hunt this weekend after a short list of six bids was thinned out.

It was not clear last night what opposition the Spanish faced, but City sources thought a group involving Fraport, the owner of Frankfurt airport, might be the other survivor. A winner is expected to be announced within a fortnight.

What has raised eyebrows is the price. It is understood both the remaining groups have offered to pay more than £700m, nearly £200m more than the highest estimates when the airport was put up for sale in May.

Such a price would be an enormous coup for Dermot Desmond, the Irish financier. He bought the airport for £23.5m in 1995 from Mowlem, the construction group. At the time, it faced an uncertain future.

Airports have soared in value around the world as investors hungry for infrastructure assets have piled into auctions. But the price being talked of for City airport has stunned even veteran infrastructure investors.

“We might look back at this and say this was the high-water mark for these kinds of deal,” said one banker involved with a consortium that submitted a bid but was eliminated early on.

Desmond has appointed the Morgan Stanley investment bank to handle the sale. It declined to comment.

City airport was opened in 1987 as part of the government’s plans to develop derelict docks east of Canary Wharf. Although it struggled for passengers in its early years, it has taken off with the boom of building at Canary Wharf and in the rest of Docklands.

In recent years passenger numbers have been boosted by approval for a number of business jets to use the airport, and the construction of a dedicated terminal for private aircraft. Last year it handled 2m passengers, and recently unveiled plans to handle 8m by 2030.