UAE groups in $50b race for airport assets

DUBAI — Six investment groups from the UAE figure prominently among 60 global airport investors holding an estimated $50 billion in funds to pursue aviation infrastructure assets worldwide.

By Isaac John (Chief Business Reporter)

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Published: Fri 7 Jul 2006, 12:18 PM

Last updated: Sat 4 Apr 2015, 3:00 PM

Led by the newly-formed Dubai Aerospace Enterprise, UAE entities gearing up for a looming battle for airport stakes and opportunities in emerging markets include Mubadla of Abu Dhabi government, Emirates National Oil Company, DNATA, Emaar and Amlak Finance, according to the Centre for Asia Pacific Aviation.

Peter Harbison, executive chairman of Centre for Asia pacific Aviation, a specialist consultancy group focused on the aviation industry in the Asia Pacific region, said the Ferrovial-led takeover of British airports conglomerate BAA has poured fuel on the global airport privatisation fire and government sellers of airport assets are likely to be the beneficiaries of the "feeding frenzy."

The Spanish infrastructure group Ferrovial recently took over BAA for £10.1 billion.

"The European market is running hot after the successful float of Aeroports de Paris and the approval by the Dutch government for an IPO of Amsterdam Schiphol," he said. More opportunities are emerging in Europe, the Middle East and Asia, he said.

"We estimate the 60 leading active and potential global airport investors have a combined pool of approximately $50 billion ready and waiting to invest. We estimate the global airport privatisation pipeline is valued at up to $40 billion — so competition will intensify in the sector and new entrants may have to pay price premiums to secure seed assets for their airport/infrastructure funds. This is not such good news for the established players." Harbison said.

Although the airport privatisation trend is not evident in the Middle East, elsewhere in the world prospects are strong for growth in private participation in airports, a leading investment analyst pointed out. "Although public provision of airport facilities and services remains dominant, the steady expansion in air transport combined with the revenue security and limited competition in the sector can be expected to continue to attract private participation in airport projects. Several countries, notably in the Middle East are expected to announce plans to carry out projects in the near future," he said.

However, in the Middle East, more than $40 billion worth of airport developments are currently taking place on the back of a booming regional economy. "Regional airport growth is accelerating to cope with the huge projected increase in commercial air traffic, while record oil prices and booming regional economies have enabled Middle East governments to allocate billions of dollars for infrastructure development," one analyst pointed out.

Harbison said many of the investors, including some new names, are circling emerging markets for opportunities, particularly in Asia and the Middle East. "The pipeline grows every day," he added.

He said the Centre's forthcoming Airport Development 2006 event aims to bring together global aviation investors and strategic interests in airport and development.

"The event will focus on issues confronting the emerging markets in the Asia Pacific, the Middle East and Eastern European regions," said Harbison



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