LONDON (Reuters) - French investment company Ardian has agreed to sell its 49 percent stake in the concession to run Britain’s fifth largest airport Luton to AMP Capital for an undisclosed sum.
A source close to the matter said the equity value of the stake amounted to 350 million pounds ($488 million), based on 2018 core earnings multiple to enterprise of less than 15 times. The implied value of the concession, including debt, is around 1 billion pounds, the source said.
“London Luton Airport is a high-quality capital city airport with significant further growth potential, catering for the high-volume London market, which makes it a compelling investment opportunity,” Boe Pahari, global head of infrastructure equity at AMP Capital said.
Passenger numbers increased to 15.8 million in 2017 from 9.7 million in 2013. A plan to build a rail link between Luton Airport Parkway and the terminal is set to reduce travel time from central London and help Luton compete with other London airports.
Since acquiring its stake in Luton in 2013, Ardian Infrastructure, together with majority owner airport operator Aena (AENA.MC), have committed more than 160 million pounds to develop the airport, Ardian said in a statement.
In March Reuters reported Ardian had hired Rothschild (ROTH.PA) to sell its stake in Luton, citing banking sources.
Banking sources later said Aena, which owns 51 percent of the airport, was not interested in using its preferential right to increase its holding to 100 percent.
In 2016, Luton airport had earnings before interest, tax, depreciation and amortization of 55 million pounds ($77 million), up from 50 million pounds in 2015.
The concession to run the airport runs until 2031, but an extension, in exchange for a further expansion of the airport, is under discussion, a second source said.
London City, a freehold airport favored by business executives because of its proximity to London’s financial districts, was sold to a pension funds consortium in 2016 at a valuation of more than 2 billion pounds, more than 30 times core earnings and a threefold increase from the price paid by the owners a decade earlier.
Ardian has assets of $67 billion managed or advised in Europe, North America and Asia and is majority-owned by its employees.
AMP Capital is a global investment manager with $146.8 billion in funds under management as of year end 2017.
It acquired 100 percent of Leeds Bradford Airport in November 2017 and is a long-standing investor in other airports including Newcastle Airport in Britain and Melbourne Airport in Australia.
($1 = 0.7173 pounds)
Additional reporting by Clara Denina; Editing by Alexandra Hudson