Airport Takeovers Witness Crash Landings and Grim Prospects
In December 2018, in one of the world’s top airport takeovers, the French giant Vinci had bought a 50.01% stake in UK’s second-busiest airport, Gatwick. In 2009, Global Infrastructure Partners (GIP), had bought the whole airport for just £1.5bn.
In 2006, GIP had bought London City airport in London’s Docklands for £750m. Later it sold it to a Canadian-led consortium of pension funds for £2bn, more than 40 times its earnings. By 2019, Gatwick had paid its shareholders £1.5 billion since 2009.
Vinci had then become the world’s second-biggest airport operator. It paid investors, led by GIP, £2.9bn for the stake. At that time, the Brexit warning aided Vinci to get 50.01% stake in for ‘reasonable’ £2.9bn.
Investors generally assumed that airports were a safe bet for predictable cash flow and high returns. Infrastructure was the hot ticket for global investors because it was viewed as a long-term, stable asset class to provide inflation-linked cashflows. Insanely high prices used to be paid in such airport takeovers in the past. Investors competed for anything with predictable cash flow, such assets changed hands for huge sums in the hunt for attractive returns. High networth individuals – bankers, CEOs, executives and politicians – used to regularly meet and celebrate in luxurious hotels of the world to make deals worth trillions.
Then by the end of the last decade, covid-19 hit. Nearly all sectors of the economy came crashing down.