TAV Airports goes on the market for £1.75bn

Europe’s fastest growing airports group has been put up for sale with a €2bn (£1.75bn) price tag.

By Helia Ebrahimi, and Garry White

9:45PM BST 29 Oct 2011

Turkey’s TAV Airports, which flies 48m passengers every year, has hired Credit Suisse to run a sales process.

TAV – itself a potential bidder for Edinburgh Airport – is likely to attract interest from the owner of Gatwick and London City airport, Global Infrastructure Partners, German airport operator Hochtief, BAA owner Ferrovial, Canada’s Borealis, Australia’s Macquarie, and the infrastructure funds from Goldman Sachs and 3i.

TAV, which is listed in Istanbul, has seen passenger numbers in Turkey surge dramatically in the last year. Last week it said third quarter net profits had increased 81pc to 90.1m (£32m) Turkish lira compared to the same time last year. Overall sales also climbed 42pc to 616.2m lira as the health of the Turkish economy has withstood the buffeting of the eurozone crisis.

Along with the Istanbul airport, the company also operates airports in Georgia, Tunisia and Macedonia – but most of these are very small. The main cash cow remains Istanbul’s Atatürk airport.

In total, the company runs more than 420,000 flights with an aim to have 100m passengers within the next 10 years.

A lot of the value of the airport company rests in how long the concession to run Istanbul airport lasts.

However, potential buyers have suggested that much of the company’s strength lies in its success running non-aviation operations, which have generated increasing amounts of profit. About 57pc of TAV’s overall sales come from non-aviation revenue such as duty free and food and beverage.

Also, there is significant opportunity to expand. Turkey has the potential to double annual passenger capacity at airports to 206m, according to San Sener, TAV’s chief executive.

Potential buyers are currently looking at the sales information with bids not due until next month.

TAV is the latest example of a Turkish asset being sought by foreign buyers in search of double digit growth. In February, Diageo bought raki maker Mey Icki for £1.3bn from private equity firm TPG.

Companies and investors have watched as Turkey has outstripped China in terms of growth. Its hypercharged acceleration saw growth in the first half of 2011 up 10.2pc.

Earlier this month, the business secretary, Vince Cable, led a delegation that included a UK construction company seeking to help build a third bridge over the Bosphorus. At the time he said: “There’s a vast potential that we haven’t tapped until now.”

Recep Tayyip Erdogan, Turkey’s prime minister, is on record as saying he wishes to double the country’s per capita income to $25,000 (£15,508) by 2023.

Turkey is currently the 17th largest economy in the world, with Mr Erdogan seeking to catapult it into the world’s top 10.

However, there have been worries that the economy could be overheating. Turkey’s trade deficit increased 55pc on a year-on-year basis in September to a record $10.41bn as imports surged. This followed an improvement in foreign trade in August.

via TAV Airports goes on the market for £1.75bn – Telegraph.