3i consortium walks away from Gatwick bid

A 3i-led bid for the UK airport has been retracted amid claims that the £2bn price tag is too steep. Gatwick owners BAA remain confident that they will achieve the asking price and four other private equity bidders are still in the game.

A private equity takeover bid for Gatwick, the UK’s second largest airport, has been abandoned by 3i, Ontario Teachers’ Pension Plan and Canada Pension Plan Investment Board.

The 3i consortium was not prepared to match the asking price of £2 billion according to a Reuters report.

Remaining bidders include Global Infrastructure Partners, a $5.64 billion infrastructure fund that already owns 75 percent of London City Airport; Citi is leading a bid with the Vancouver Airport Services and John Hancock Life Insurance; as is Manchester Airports Group along with Borealis Infrastructure, the infrastructure arm of the Ontario Municipal Employees Retirement System, a Canadian pension scheme.

Deutsche Bank and Babcock & Brown have also reportedly retracted their joint bid. However a source close to the matter said that Deutsche Bank’s RREEF Infrastructure fund is still interested in the deal.

Gatwick: Up for grabs

A 12-strong banking syndicate which formerly backed the 3i consortium is considering moving its funding to an alternative bidder, a source said.

Gatwick’s owners, the British Airports Authority (BAA), an affiliate of Spanish construction and infrastructure firm Grupo Ferrovial, dismissed the claims that the valuation was too high, and is confident it will achieve more than its regulated asset base of £1.65 billion. “Contrary to comments being reported today, the market and the market alone will determine the sale price of Gatwick and we are confident that the level of interest will achieve a significant commitment,” a spokesman for BAA said in an interview.

Last September BAA revealed plans to sell Gatwick after the UK’s Competition Commission proposed to force the firm, which owns seven airports, to sell off three of them amid concerns about the BAA’s dominance in the market. BAA owns three airports in London and others in Southampton, Glasgow and Edinburgh.

When the sale was first announced last year, regulators valued Gatwick and £1.8 billion and predicted that it could fetch as much as £3 billion.

The deadline for binding bids is believed towards the end of March or early April. BAA declined to clarify this.

The bidding groups declined to comment.