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Tchenguiz Joins the London City Airport Bidding Process

Posted on: Saturday, 3 June 2006, 00:00 CDT

By The Business, London

May 21--Acquisitive property tycoon Robert Tchenguiz has contacted Morgan Stanley about buying London City Airport from fellow billionaire Dermot Desmond, The Business has learned.

Morgan Stanley is handling the sale process on behalf of Desmond but has not yet put out a sale memorandum. London City Airport is thought to be worth at least £300m (E440m, $563m).

Tchenguiz is understood to be interested in the airport because of its prime real-estate location near Canary Wharf and the investment banking community. He is also thought to be keen to link up with another infrastructure fund. US private equity group Carlyle has put together an infrastructure team which might also take a look at City, among other assets.

Sources claim that Australian bank Macquarie is also interested. Macquarie came to an agreement with Spain's Ferrovial in March that if Ferrovial successfully bought BAA, which owns Heathrow, then Macquarie could buy Ferrovial's interests in both Sydney and Bristol airports. Ferrovial's 810p per share bid for BAA, valuing the airport group at £8.75bn, is considered too low. To date, Ferrovial has received only 0.35 percent acceptances.

With multiples for infrastructure assets running at an all-time high, London City Airport is considered a prime target for infrastructure funds, as the airport seeks expansion. Last week Airbus announced it was carrying out tests at London City to see if its 132-person A318 jet can take off from there.

The A318 will allow airlines to operate new routes out of the airport to Rome, Madrid and eastern Europe. This fits in with the airport's expansion plans to carry 8m passengers by 2030 without the need for an extra runway or a change in its operating hours. The airport handles 2m passengers a year and makes a £17.4m operating profit.

By Adam Durchslag and Russell Hotten

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Copyright (c) 2006, The Business, London

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FER, BAAPF, BAAPY, MBL,

Source: Sunday Business

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