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NEWS Last modified on December 19, 2011

Private equity group 3i set to bid for Edinburgh Airport

Private equity house 3i Group is in the process of lining up a bid to buy Edinburgh Airport from BAA, it has been revealed.

Private equity house 3i Group is in the process of lining up a bid to buy Edinburgh Airport from BAA, it has been revealed.

According to reports in The Financial Times, the listed private equity group’s infrastructure arm has teamed with UK pension investor, Universities Superannuation Scheme (USS), and with M&G, Prudential’s European fund management business, to make an offer for the gateway.

In addition, the report said that the investment bank Macquarie has been appointed as the group’s advisor.

3i Group and its partners is the latest consortium to be cited in the race to buy the Scottish hub.

In November the Carlyle Group, a US private equity group, was revealed as the first company to begin putting together a consortium to make a bid for the gateway.

At the time, Sir Angus Grossart, a veteran Edinburgh investment banker, was said to be advising the Carlyle Group on the bid and was looking for other Scottish financial institutions to join the consortium.

Since then, Brian Souter, the founder of Stagecoach, has also emerged as a potential buyer and is said to be considering making an offer through Souter Investments, his buy-out vehicle.

Airport operator BAA announced its decision to sell Edinburgh Airport in October, following the Competition Commission’s ruling that it must sell one of its Scottish gateways.

In October BAA said it was starting preparations for a sale and expected to formally approach the market in the New Year with a view to agreeing a sale by Summer 2012. The airport operator is hoping to get at least £500m for the airport.

3i said it “did not comment on market speculation”.

Commenting on the revelations, Roger Buckley, corporate finance partner at BDO LLP, said: “The choice by BAA to sell Edinburgh airport rather than Glasgow was a surprise, and the eventual winner may well surprise us too.

“Such businesses are seen as a relatively secure asset class and a safe haven amidst a troubled investment market, so it is logical that the likes of 3i, Souter and Carlyle are interested.

“The involvement of Universities Superannuation Scheme in 3i’s bid will likely warm to those who have called for pension fund to invest in UK infrastructure, but they may not tick enough boxes with the Competition Commission, who tend to favour bids from operators with airport experience.”

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