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Are Airport Infrastructure Investments Taking Off Again? – September 2015

by Tom Begley

  • 02 Sep 2015
  • INF

Airport infrastructure is an area of the market that consistently attracts interest from a range of investors due to continued demand for the services. The Deals module on Preqin’s Infrastructure Online service contains detailed information on 377 completed airport-related deals historically, which include the construction and sale of airports, as well as aircraft. While such deals represent only 3% of the 11,465 completed infrastructure deals featured on Infrastructure Online, the global airport infrastructure space appears to be ready to take off once again.

In terms of deal flow, 2013 saw the highest volume of investment activity, with 39 transactions reported for an estimated aggregate deal value of $23.8bn. 2014 figures were down on the previous year, with only 16 transactions taking place worth an estimated aggregate deal size of $5.1bn; however, these figures are likely to rise as more transactions come to light. With just under half the year remaining, 2015 looks set to exceed 2013’s record deal value considerably, with 30 deals already completed for an estimated $18.1bn. These figures will also continue to rise over the coming months as more data comes to light, and following the pending sale of Global Infrastructure Partners’ stake in London City Airport.

One reason for the increase in the number of transactions and deal value size is the growing level of privatization in the airport industry. Due to budget cuts, increased passenger traffic and high operating costs, governments are now becoming more open to private investment. A prime example of this is the recent wave of privatization concessions in Greece as it attempts to meet its bailout conditions. Fraport AG, an international airport operator and airport management services provider, acquired the concession to run, operate and maintain 14 regional airports for a total consideration of €1.2bn.

Other notable transactions in 2015 include July’s LaGuardia Gateway Partners deal, whereby a consortium consisting of Meridiam’s North American Infrastructure Fund, Vantage Airport Group, Skanska, Tishman Construction and Parsons Brinckerhoff finalized a contract for the $4bn LaGuardia Airport Central Terminal Building replacement PPP/PFI project.

The level of airport infrastructure deals looks set to continue rising, driven by sustained privatization activity as governments seek to realize cash through asset sales; countries such as Spain, France, Brazil and Greece have all announced plans for further levels of privatization in 2016. Japan’s government has also announced plans to let concessions to run four airports between 2014 and 2019.

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