Gatwick airport bidders step up

[January 19th 2009]

The identity of the new owner of Gatwick airport should become clearer today as first bids are expected.

The auction of Gatwick airport enters its first stage today as formal bids are made. Experts have valued the airport at about £2 billion, but early indications about the number of bidders suggest the price may be pushed up in a bidding war.

Speculation about bidders has been mounting over the last few months since Gatwick owner BAA announced the airport was for sale. According to reports from Reuters, a consortium called Global Infrastructure Partners (GIP) will definitely make a bid for Gatwick today. GIP is a joint venture between Credit Suisse and General Electric and already owns London City airport.

Another consortium with experience in operating airports which is hotly tipped to bid for Gatwick is the joint venture between Manchester Airport Group (MAG) and a Canadian pension fund called Borealis. MAG already owns Manchester, East Midlands, Humberside and Bournemouth airports, making it the second largest airport operator in the UK after BAA.

Gatwick appears to be an attractive proposition financially judging by some of the bidders expected to compete for ownership of the airport. Gatwick is the second busiest airport in the UK after Heathrow, handling more than 35 million passengers a year. However, further expansion at Gatwick may be difficult for any new owner as by law a second runway at Gatwick can’t be built until 2020 at the earliest.

Gatwick Future Partnership, a consortium comprising Babcock & Brown, an Australian investment firm, and Deutsche Bank, is also widely tipped to table a bid for Gatwick.

Also expected to compete for ownership of Gatwick are Lysander Gatwick Investment Group, a consortium comprising Citigroup, John Hancock and Vancouver Airport. In the running too is likely to be Hochtief AirPort a division of a German engineering group.

An accounting firm will oversee the bidding process to ensure fair play. The new owner of Gatwick will have to continue with the £1 billion improvement works underway at the airport.

Written by: Nick Purdom

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