Exclusive: Competition for Nice Airport saps trade appetite

Heated competition for the largest airport currently being divested by the French state has turned away usual contenders for international hubs, according to people with knowledge of the matter.

Zurich Airport, allied with Toronto-based Canada Pension Plan Investment Board, is said to be the only European trade player still vying for Nice Airport, in which the government is looking to sell a 60 percent stake.

Frankfurt-headquartered Fraport and AviAlliance, a former subsidiary of Germany’s Hochtief now owned by Canada’s Public Sector Pension Investment Board, have decided that the auction is going to be too competitive for them to take part, sources told Infrastructure Investor, adding that a lower cost of capital would likely give infrastructure funds and direct investors a stronger head start.

Last November, Fraport won a €1.234 billion contract to lease and operate 14 Greek regional airports, adding to the six hubs it currently runs in Europe. AviAlliance meanwhile operates five airports on the continent, including Hamburg, Budapest and Athens airports.

Zurich Airport declined to comment other than saying that “the company regularly assesses the strategic fit of opportunities in Europe and around the world. If a suitable investment opportunity arises, we intend to participate with a partner sharing our investment philosophy for a long-term development of the asset and its surrounding region”.

CPPIB declined to comment. Fraport and AviAlliance did not respond to a request for comment.

The French government kick-started the privatisation of Nice Airport last March, with indicative bids initially due by 28 April but then delayed by a couple of weeks. About nine teams have passed pre-qualification stage, sources said, with an update on shortlisted bidders expected by the end of June. It is understood that four to five teams will be invited to the next round.

Nice Airport is expected to be sold slightly earlier than Lyon Airport, a smaller hub the French state is also looking to divest. Nice Airport’s corporate value is estimated at €1.8 billion, versus €1.4 billion for Lyon, according to law firm Ashurst.

Industry observers say both processes have been delayed by a number of months due to regional elections in France, the terror attacks in Paris and quite possibly a desire not to compete with the sale of London City Airport, concluded last February.