Exclusive: UAE funds vie for stake in $1.6bn French airports group

Aéroports de la Côte d’Azur is targeting Middle Eastern investors as the Paris gov't continues its drive to privatisation its airports
Exclusive: UAE funds vie for stake in $1.6bn French airports group
By Sarah Townsend
Thu 09 Jul 2015 12:02 PM

A handful of UAE investment firms are working up proposals to buy the billion-dollar company that owns Nice, Cannes and Saint Tropez airports in the South of France, marking what would be the first time a Middle Eastern company has acquired a controlling stake in a European airports group.

Around five UAE-based firms – including several unnamed sovereign wealth funds – have contacted Aéroports de la Côte d’Azur to express an interest in purchasing the lucrative company when it comes on the market this autumn.

The French government was expected to ratify plans to privatise the state-owned group on Thursday.

As well as Nice, Cannes and Saint Tropez airports, the group owns a network of general aviation terminals, which it leases to airports in Madrid, Barcelona, Ibiza, Palma, Malaga and other European cities.

The company is believed to be worth at least €1.5 billion ($1.6 billion) and recorded €235 million of revenues in 2014, €100 million of net debt and an Ebidta (earnings before interest, taxes, depreciation, and amortization) margin of 43.8 percent, making it the most profitable airports group in France and one of the most profitable in Europe.

Shareholders are believed to be finalising what proportion of the company will be put up for sale, but Arabian Business understands the minimum will be a majority stake, so upwards of 50 percent of the group. The exact share will likely be open to negotiations with prospective buyers and will depend on the specific offer they put forward.

The French government will issue a tender by the autumn and a sale is expected to conclude by the first quarter of 2016.

In an interview with Arabian Business, group president Dominique Thillaud said a variety of interested parties were working to form consortia ahead of the tender process.

He said the Gulf investors that have expressed interest are less likely to lead a consortium than back it, but they are “sniffing around” and awaiting the start of the formal sales process.

“Interest is coming mainly from the UAE and from sovereign wealth funds and infrastructure investment firms there. They will have to make up their minds in due course as to whether or not to pursue a sale, but all I know is that the group Aéroports de la Côte d’Azur is the perfect asset for those types of investors.

“It’s a very good asset and they will want to be a part of it. We have a good balance between commercial and general aviation and operate in a lively market where there are a lot of wealthy people travelling here from Middle Eastern countries.

“I would say the Nice, Cannes and Saint Tropez catchment area is one of the most preferred destinations for Gulf cities.”

Dubai's sovereign wealth fund, Investment Corporation of Dubai, which is the parent company of Emirates Airline, and Abu Dhabi Airports Group declined to comment when contacted by Arabian Business, while Abu Dhabi-based Mubadala said it “does not comment on market speculation”.

A Dubai Airports spokesperson said in a statement: “Dubai Airports is focusing its efforts and resources on its own considerable expansion plans including the completion of the SP2020 Programme and planned expansion of DWC.”

Around 265,000 passengers travelled from the Middle East to Nice-Côte d’Azur Airport alone last year, according to the company’s own statistics. Thillaud said the number is “not big in terms of volume, but significant in terms of contribution to the local economy” – through shopping, hotel stays and real estate investment in particular.

“We have a longstanding relationship with the Middle East,” he said. “For us it is a powerful tool to drive economic growth and create jobs in France.

“This year we celebrate the 20th anniversary of Emirates Airlines operating services to Nice, and we hope to develop the same strong relationship with other Gulf airlines.”

Thillaud is currently lobbying the French government to open up restrictive air traffic rights for Gulf carriers to enable them to service more routes to Europe and said he does not support the US carriers’ ongoing fight to suppress further global expansion of Emirates, Etihad and Qatar Airways.

“For me it is not a political subject; it is a subject of growth of my territory and its ability to continue accelerating in terms of economic value.”

However, he admitted that the planned sale of Aéroports de la Côte d’Azur was a “touchy subject” among shareholders at present, because of the size and profitability of the company and the need to secure the best deal possible.

In April, the French government sold a 49.9 percent stake in Toulouse Blagnac Airport to a Chinese-led consortium for $332 million. That deal proved also controversial, reportedly raising concerns that foreign investors were capitalising on France’s economic insecurity.

But Thillaud said privatisation of his far larger group was a “completely different story”.

Update: July 9, 1pm: Abu Dhabi Airports has issued the following statement confirming it "is not amongst the interested buyers."

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