19.02.06
Aeroports de Paris (ADP), the French group being primed for privatisation, is likely to be valued at €3bn (£2bn, $3.6bn) due to the renewed interest in airport groups sparked by the takeover battle for BAA, its British equivalent. ADP, which operates Paris Charles de Gaulle and Orly airports, reported a 4.4% increase in 2005 passenger traffic, making it Europe's largest in volume. The valuation comes according to a report in The Business newspaper today.
Thierry Breton, the French finance minister, is looking to press ahead with an early listing of ADP soon after the company reports annual results at the end of next month - with valuations for such groups still at a high. But the French government will retain a controlling stake, eliminating ADP from the global airport consolidation happening from Mexico to China as players seek to build global empires.
Grupo Ferrovial, the Spanish infrastructure giant, said less than two weeks ago that it was considering a bid for BAA, which runs seven of Britain's largest airports including London's Heathrow. This comes at a time of consolidation in the sector worldwide.
Fraport of Germany was last week reported to be in detailed talks to buy 49% of Xian Xianyang, China's 9th largest airport, in the booming Shaanxi province. Fraport's shares have risen some 40% in recent months.
Such valuations have sent other nations queuing up to privatise their national airports groups. The airports of Athens, Munich, Mexico, Prague, Schipol and TAV in Turkey are in the pipeline for flotation.
European airports have for decades been state-run and state-protected - so the coming wave of liberalisation means their assets are ripe for consolidation. Airports are also favoured by venture capital groups as they rival the property sector for stable cashflow and relatively low price.
The French government is floating between 24% and 29% of ADP's capital - raising up to €870m. It would divest the rest of its shareholding over time, but is highly likely to block any takeover offering - thus limiting the upside for investors.
Macquarie, the acquisitive Australian group, bought a controlling stake in Copenhagen airport two months ago in a deal which suggested a generous enterprise value of 13 times underlying earnings. This bodes well for ADP, whose €1.8bn annual turnover is similar to the €1.8bn of Fraport but operates in a regulatory environment closer to BAA, according to analysts.
The French government recently awarded ADP a 5% increase on airline tariffs, or an extra annual €30m in revenue. ADP plans €2.5bn of investment over 5 years, including a mini-metro to connect its sprawling terminals. BAA is spending €6.5bn on its terminal five at Heathrow airport.
