Austerity measures could prompt sale of significant Athens International Airport stake

The Hellenic Republic Asset Development Fund’s (HRADF) executive chairman Aris Xenofos confirmed the agency is hoping to sell its 30% stake in Athens International Airport (AIA) by early 2019. HRADF approved a price revision of EUR1380 million for a 20-year extension of the AIA concession in mid Sep-2018.


Summary:

  • The Hellenic Republic Asset Development Fund is set to sell its stake in Athens International Airport by early 2019;
  • The current concession ownership of Greece’s largest air gateway is a complex affair including both local and foreign investors;
  • Austerity measures have prompted the sell-off of many airports;
  • A Greek company could increase its stake but bigger players will covet what is now seen as a ‘prize’ acquisition.

The current concession ownership is a complex affair involving the Greek Copelouzos family (5% holding), but the leading players, apart from the Greek State (which was ordered to sell off infrastructure such as airports as part of its bailout terms) and its HRADF, is PSP/Avialliance (Capital), previously Hochtief Airport (Capital).

There have been a number of developments surrounding the AIA ownership since early 2017 when the Greek Government postponed plans for the sale of a 30% stake – of which it owns 55% in total – until the renewal of the airport’s concession agreement. AIA was established in 1996 as a public-private partnership with a 30-year concession agreement to operate the airport.

CHART – The current concession ownership of Athens International Airport is a complex affairSource: CAPA – Centre for Aviation

HRADF, or TAIPED as it is also known, had previously expected to extend the concession for a further 20 years with Avialliance and the Copelouzos Group, by Sep-2016. PSP Investments, which has a 40% stake in the airport’s ownership, was planning to bid for the government’s 30% stake.

HRADF was reported to be seeking a lump sum payment of EUR580 million to extend the concession on the basis that an extension of the contract for the airport would increase the value of the stake still held by the state.

In Mar-2017 the Transport Minister approved an extension of AIA’s concession agreement involving HRADF, Avialliance and Copelouzos Group for 20 years, the agreement to be in place by the end of Jun-2017. However, HRADF declined the offer, and asked AIA’s management for the submission of an improved one.

HRADF accepted a revised financial offer in May-2017; one that amounted to EUR600 million, including corresponding VAT. HRADF forecast additional expected revenues paid from annual remuneration by Athens Airport to total EUR894 million for the 20-year extension. Estimated revenue from AIA’s income tax will reach EUR1.47 billion. AIA will commit to a total investment in the airport of EUR2.14 billion over the 20-year period. HRADF and the Greek State eventually signed off the extension in Oct-2017.

Then in Feb-2018 the government confirmed it wanted to reduce its collective share capital in AIA, including the HRADF share, in Mar-2018, as part of an overall plan to raise around EUR3 billion in state asset sales by 2019 in compliance with its third bailout programme. An IPO has been discussed in the past and should not be ruled out though one is unlikely.

CHART – Athens International Airport’s passenger traffic growth is positive and strong and has been since 2014Source: CAPA – Centre for Aviation and Athens International Airport reports

This protracted process continues but an end is now in sight. But, who would HDRAF’s buyer be? Clearly PSP/Avialliance has its designs on achieving a majority stake, at which time offers might be made to buy out minor interests although Copelouzos is a significant player in its own right as a co-investor in 14 Greek regional airports with Fraport, and it has already expressed its interest.

Fraport itself could also come into the frame but that would mean a majority shareholding in the capital city’s airport accruing to ‘German’ companies, which might not go down well with the Greeks. Then there is Vinci, which seemingly has its eyes on everything. While an IPO is possible the Greek economy may not yet be sufficiently “recovered” for that.