The potential sale of TAV Airports, which accounts for about 45 percent of all airport passengers in Turkey, is gaining steam with indicative bids expected by end of November, sources familiar with the transaction told Infrastructure Investor.
TAV Airports is listed on the Istanbul Stock Exchange and has a market capitalisation of around €1 billion. In late September, the airports operator’s two main shareholders – local firms Akfen and Tepe Insaat Sanayi Anonim Sirketi, which own over 52 percent of the firm – mandated Credit Suisse to look at a potential sale of TAV Airports.
The sale could net a premium to TAV Airports’ market share of some 20 percent, an analyst suggested, although a report in the UK’s Sunday Times speculated the unit could actually fetch around €2 billion, or twice its current market capitalisation.
In a research note on Turkish equities issued earlier this month by HSBC Global Research, the research unit pointed out that “TAV generates a higher asset turnover than European peers with compatible margins”. The report also stressed that “TAV’s integrated structure (with ground handling, duty free) provides it with an efficient structure,” adding:
“As its foreign airport operations mature, one can expect TAV to improve its asset turnover and profit margins further through better scale and operational leverage.” The research note also highlighted the growth potential of one of TAV’s most important assets: Istanbul’s Ataturk Airport.
“We expect passenger traffic to almost double at Ataturk in the next 10 years. The only setback is the capacity issue at the airport. If appropriate measures are taken by authorities to create space, TAV can accommodate such growth at Istanbul Ataturk,” the research states, concluding: “TAV’s long-term growth prospects remain intact with continued double-digit growth in passenger traffic in Turkey.”
In related news, TAV Airports announced today that it has clinched the contract to rehabilitate and operate Saudi Arabia’s Medina International Airport. The 25-year build-operate-transfer contract requires the consortium – which also includes local companies Al Raihi and Saudi Oger – to more than double the airport’s current 3.3 million yearly passenger capacity to eight million passengers a year. TAV will do this by investing between $1 billion and $1.5 billion in building a new terminal.
TAV Airports’ president and chief executive, M. Sani Sener, said the firm was ready to start working on the airport project. “As we have already arranged the financing prior to the tender, it is one of our biggest objectives to start the investment in the project at once and to ensure early completion,” he stated.