Australia's IFM enters UK airspace

The investment is part of the MAG's GBP1.5 billion ($2.4 billion) purchase of London Stansted Airport, Britain's fourth-largest airport by passenger numbers. MAG had made no secret of its interest in Stansted ever since the asset was put up for auction by BAA. The seller, owned by Spain's Ferrovial, already runs five UK airports, including Heathrow, and had been ordered by regulators to divest some of its assets. Other bidders for Stansted are said to have included Macquarie and Malaysia Airport Holdings. 

Situated 50 kilometers from London and boasting a single runway, Stansted is predominantly a low-cost holiday airport. The acquisition price represents a multiple of 15.6x Stansted's 2012 EBITDA, which compares favorably with similar airport transactions in the country. IFM channeled the investment through its open-ended Global Infrastructure Fund after an 18-month discussion with MAG.

"Airport investments tend to have a slightly higher return than some of the more heavily regulated sectors as they are more linked to the up-and-downs of economic activities," Kyle Mangini, IFM global head infrastructure, tells AVCJ. "While there have been shocks such as SARS and 911, by and large airport traffic tends to increase predictability over time."

MAG owns East Midlands and Bournemouth airports in addition to Manchester. The group currently serves 24 million passengers and handles almost 500,000 tons freight every year. Passenger numbers and profit rose 6.7% and 26%, respectively, for the year ended March 2012.

"MAG has done a great job in managing its airports which are located at places with strong population and economic characteristics," Mangini adds. "For any airport investment, it's always a matter of understanding the nature of the GDP, population base and the nature of the regulation that we are working within."

The acquisition follows IFM's another bid for state-run airport operator ANA-Aeroportos de Portugal SA, which was part of a privatization program Portugal compromised to undertake in order to secure bailout package from the European Union and the International Monetary Fund. The asset manger was finally out bid by French construction company and highway operator Vinci SA in December.

"There has been reasonable deal flow in the airport investment space," Mangini adds. "Although airports are already funded by private money in many parts of the world, there is still a considerable amount of state-owned assets which may be privatized and we continue to be very active in this space and analyze every opportunity."

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