Manchester Airports Group wants IFM as partner

The owner of three UK airports has concluded its search for a possible private sector investor with the announcement that Industry Funds Management is its preferred choice. However, the tie-up is conditional on MAG adding a new airport to its portfolio.

Manchester Airports Group (MAG) – owner of the UK’s Manchester, East Midlands and Bournemouth Airports – has announced a conditional tie-up with Australian-headquartered fund manager Industry Funds Management (IFM).

The partnership, which would reportedly see IFM take a 35 percent stake in MAG, would only take effect in the event that MAG succeeds in adding a new airport to its portfolio. Its prime target is understood to be Stansted, the third-busiest airport in the London area and the UK’s fourth-busiest, which BAA reluctantly agreed to sell last month.

In a statement, MAG said: “In February 2012, MAG confirmed that it was inviting detailed proposals from private investors as part of a strategic review of the business. This phase of the review has now been completed with Industry Funds Management (IFM) selected as MAG’s preferred partner.”

It added: “MAG is continuing to consider opportunities to add a quality airport to the Group.  An equity investment by IFM will only be triggered by the acquisition of another airport by MAG.”

It is understood that MAG is currently seeking approval for the possible deal from its council stakeholders, who would need to agree new governance arrangements. The business is owned by the Association of Greater Manchester Authorities, with Manchester city council having a 55 percent stake and nine other councils five percent each (totaling 45 percent).

It was reported by the Manchester Evening News that the proposed deal would see Manchester city council reduce its stake to 35 percent, with IFM acquiring 35 percent and the two parties having equal voting rights. The nine councils would reduce their combined holding to 30 percent.

Stansted Airport – thought to be worth around £1 billion (€1.2 billion; $1.6 billion) – is in MAG’s sights after BAA reluctantly agreed to sell the airport following seven appeals against a 2009 ruling by the UK’s Competition Commission that BAA must sell Stansted as well as one of its Scottish airports to loosen its grip on the UK airport sector. It went on to sell Edinburgh Airport to New York-based fund manager Global Infrastructure Partners in an £807 million deal in April this year.

MAG owned four UK airports prior to selling an 82.7 percent shareholding in Humberside Airport to aviation specialist Eastern Group for an undisclosed sum last month. 

*To find out more about IFM's investment strategy, click here to read our exclusive interview with chief executive Brett Himbury, published in the September 2012 issue of Infrastructure Investor.