-----------------------------------------------------------------...

--------------------------------------------------------------------------------
Main page content:
Five bidders on short list for Hungary airport
By Kevin Done in London and Chris Condon in Budapest
Published: August 27 2005 03:00 | Last updated: August 27 2005 03:00

The Hungarian government yesterday announced a short list of five bidders for Budapest airport, with one indicative bid of €1.6bn ($2bn), well in excess of the $1bn valuation originally forecast by investment bankers.


Three leading European airport operators - BAA of the UK, Fraport of Germany in a consortium with Deutsche Bank, and Denmark's Copenhagen airport - are targeting the fast-growing central European airline sector.

Macquarie Airports Holdings, the Australian-listed international airport fund, and Hochtief the German construction group and airport investor, complete the list.

The highest bid represented a multiple of 20 times prospective 2006 ebitda earnings for Budapest airport. Comparable airport privatisation deals in recent years, where majority stakes were available, have achieved valuations of 15-16 times earnings.

Hungarian officials did not disclose which group placed the highest offer, but a banker close to the deal said the figure was announced in an attempt to create a floor for the second round of offers.

The government is selling a stake of 75 per cent minus one share, and the Budapest Ferihegy International airport company will have a 75-year concession.

The deadline for final offers is November 2. The quality and airport operating experience of the bidders was important in determining the shortlist, but the final decision will largely be determined by the offer price.

The Hungarian government rejected four bids in the first round, two of which were from Spanish infrastructure groups Ferrovial and Abertis.

The other two offers rejected were from TAV of Turkey and a local consortium, which included OTP Bank, Hungary's biggest bank, Mol, the Hungarian energy group and Trigranit, a property developer, together with Venice airport as strategic partner.

The government is being advised by CSFB and Concorde Securities with Clifford Chance as legal adviser.

Separately, Hungarian privatisation officials yesterday cancelled the planned sale of Malev, the state-owned airline, the fifth time the government has failed to sell the troubled national flag carrier.

The privatisation of Budapest airport is likely to be one of the biggest airport sell-offs completed globally this year.

The airport has been growing rapidly since the entry of Hungary into the European Union, which has opened the way for the arrival of several low-cost airlines, which have turned Budapest into one of their main gateways into central Europe. Passenger numbers rose by 28.6 per cent last year to 6.5m.