{"id":117707,"date":"2021-07-05T15:44:31","date_gmt":"2021-07-05T15:44:31","guid":{"rendered":"https:\/\/fin2me.com\/?p=117707"},"modified":"2021-07-05T15:44:31","modified_gmt":"2021-07-05T15:44:31","slug":"sydney-airport-gets-16-7-billion-buyout-bid-as-investors-take-longer-term-view-on-travel","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/sydney-airport-gets-16-7-billion-buyout-bid-as-investors-take-longer-term-view-on-travel\/","title":{"rendered":"Sydney Airport gets $16.7 billion buyout bid as investors take longer-term view on travel"},"content":{"rendered":"

SYDNEY (Reuters) -A group of infrastructure investors has proposed a $22.26 billion ($16.7 billion) buyout of Sydney Airport Holdings Pty Ltd, the operator of Australia\u2019s biggest airport, taking a longer-term view on the pandemic-battered travel sector.<\/p>

FILE PHOTO: Passengers walk with their luggage towards departure gates at Sydney International Airport in Australia, October 25, 2017. Picture taken October 25, 2017. REUTERS\/Steven Saphore<\/figcaption>

Record-low interest rates have led pension funds and their investment managers to chase higher yields. The purchase, with an enterprise value of A$30 billion including debt, would allow them to reap financial benefits when borders reopen and travel demand rebounds.<\/p>\n

If successful, the deal would be Australia\u2019s biggest this year, eclipsing the $8.1 billion spin-off of Endeavour Group Ltd and Star Entertainment Group Ltd\u2019s $7.3 billion bid for Crown Resorts Ltd.<\/p>\n

The Sydney Aviation Alliance – a consortium comprising IFM Investors, QSuper and Global Infrastructure Partners – has offered A$8.25 per Sydney Airport share, a 42% premium to the stock\u2019s Friday close.<\/p>\n

The news sent the stock up as much as 38% to A$8.04 in early Monday trade, though it later retreated to around A$7.55, indicating market uncertainty as to whether the deal will succeed.<\/p>\n

Sydney Airport noted the offer was below its pre-pandemic share price and said it would review the proposal, which is contingent on granting due diligence and recommending it to shareholders in the absence of a superior offer.<\/p>\n

The airport operator\u2019s share price hit a record A$8.86 in January last year, before the novel coronavirus pandemic led to a collapse in travel demand.<\/p>\n

The company is Australia\u2019s only listed airport operator. A successful deal would bring its ownership in line with the country\u2019s other major airports which are owned by consortia of infrastructure investors, primarily pension funds.<\/p>\n

Australia\u2019s mandatory retirement savings system, known as superannuation, has assets of A$3.1 trillion, according to the Association of Superannuation Funds of Australia.<\/p>\n

Related Coverage<\/p>\n<\/p>\n

With record-low interest rates, funds are looking at infrastructure investments for higher yields.<\/p>\n

\u201cIt\u2019s the right timing to be looking at these assets which have got a 75-year life when conditions are arguably at the bottom,\u201d said a Sydney Airport investor who declined to be named because the person\u2019s firm was still assessing the proposal. \u201cIt\u2019s opportunistic in that regard, but understandable.\u201d<\/p>\n

Australia\u2019s international borders are widely expected to remain closed until at least the end of the year due partly to a slower vaccination programme than in most developed countries.<\/p>\n

Domestic travel has also been disrupted by a two-week lockdown in Sydney during the normally busy school holiday period, after an outbreak of the highly contagious Delta variant of COVID-19. Other states have closed borders to Sydney residents.<\/p>\n

In May, Sydney Airport\u2019s international traffic was down more than 93% versus the same month of 2019, while domestic traffic was down 39.2%.<\/p>\n

The airport has long held a monopoly on traffic to and from Australia\u2019s most populous city, but that is due to end in 2026 with the opening of Western Sydney Airport.<\/p>\n

Sydney Aviation Alliance said it did not anticipate making substantive changes to the airport\u2019s management, services, operations or target credit ratings.<\/p>\n

The consortium said its members invest directly or indirectly on behalf of more than 6 million Australians and collectively have more than A$177 billion of infrastructure funds under management globally, including stakes in 20 airports.<\/p>\n

IFM holds stakes in major airports in Melbourne, Brisbane, Perth and Adelaide. QSuper owns a stake in Britain\u2019s Heathrow Airport whereas Global Infrastructure is invested in that country\u2019s Gatwick and London City airports.<\/p>\n

Their offer is contingent on UniSuper, Sydney Airport\u2019s largest shareholder with a 15% stake, agreeing to reinvest its equity interest for an equivalent equity holding in the consortium\u2019s vehicle.<\/p>\n

UniSuper, which also holds stakes in Adelaide and Brisbane airports, said it was not a consortium partner nor privy to any details outside information disclosed publicly.<\/p>\n

\u201cUniSuper does however, in-principle, see merit in Sydney Airport being converted from a publicly listed company to an unlisted company. UniSuper also has a favourable view of the consortium partners,\u201d the fund said.<\/p>\n

($1 = 1.3294 Australian dollars)<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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