Moderated by Alex Kirby, executive vice president of our sister UBM Live company, Airport Cities, a panel discussion at Invest and Manage, part of the many additional sessions offered at this year's World Routes, highlighted how their respective companies viewed the investment process, which financial models are best to use and how to produce the best Airport Information Memorandum.
Kirby introduced the session with a brief presentation outlining investment, explaining that the transaction structure can be free-hold or a concession. While free-hold has potentially wider financing options, a concession means there is no loss of ownership.
Airport investors can be through infrastructure funds, such as Global Infrastructure Partners (GIP); direct investors, such as Fraport; and strategic investors, such as Manchester Airports Group (MAG). Valuation of an airport depends on several features: traffic and catchment; aeronautical revenue; non-aeronautical revenues; operating expenditure; capital expenditure; and financing.
The panel comprised Amit Rikhy, vice president and head of acquisitions, ADC&HAS Airports Worldwide; Leonid Sergeev, CEO, Krasnodar and Sochi Airports; and Gordon Dewar, CEO of Edinburgh Airport.
Dewar noted that investors need to focus on maintaining passenger traffic at the start of any acquisition. He added that GIP was keen to keep its three UK airports – Gatwick, Edinburgh and London City – as separate entities. Further, he said that the investments were successful through focus; for example, a dedicated board meets monthly at Edinburgh Airport to facilitate quicker decision-making.
Sergeev told delegates that his airports’ investor, Basel Aero, was developing its relationship with the Russian government. He said the operator had made lots of changes at Sochi in preparation for the 2014 Winter Olympics. Additionally, he stated that Basel Aero’s partner, Changi Airports Group, helped greatly by offering its expertise on non-aeronautical revenue at the airports.
When discussing smaller airports, Rikhy stated: “Transparency is critical for investors”. Dewar added that, for small airports, an investor would want to see a growth strategy to match demand.
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