The privatisations of controlling stakes for the Nice and Lyon airports in France, two major regional airports, attracted a variety of bids from infrastructure funds and airport operators. Two airport operator-led consortia won, with valuations for both assets roughly the same at 19x and 20x earnings before interest, tax, depreciation and amortisation (Ebitda). 

Revised sale process

In 2015 the French state completed a privatisation of 49.99% of Toulouse-Blagnac Airport’s concession company, with a Chinese consortium of Friedmann Pacific and Shandong Hi-Speed the buyers.

It paved the way for two larger privatisations – the sales of Aéroports de la Côte d’Azur which operates Nice, Cannes Mandelieu and Saint-Tropez airports and the Sky Valet services until 2044, and Aéroports de Lyon which operates Lyon Saint Exupéry and Lyon Bron airports until 2047. Nice Airport saw traffic of 12 million annually in 2015, and Lyon 8.7 million.

Auctions for controlling 60% stakes of both launched in March 2016 and ran simultaneously. The government and advisers had made certain changes to the tender process.

A new rule on bidders’ airport experience excluded a number of interested parties, for example Friedmann Pacific and HNA. For Nice Airport the conditions were that one member of the consortium must have owned either 10% for two years of an airport operator handling at least 15 million passengers in 2015, or 20% of a 12 million-passenger airport. For Lyon the same volume applied for a 10% stake, or for 20% equity the minimum number of passengers was 9 million.

In addition, this time the state held a third round for a smaller group of bidders, resulting in increased best offers.

July final offers

For Nice, the successful Italian and French Azzurra consortium beat a Vinci Airports-led all-French consortium in second place. Ardian and Caisse d’Epargne came third.

For Lyon, the same Vinci Airports consortium won, beating into second place Macquarie which was said to have been bidding with the Peugeot family’s investment vehicle FPP.

For both airports various local authorities are the co-shareholders.

Gabriel Flandin, partner at Willkie Farr & Gallagher, says: “The state said to bidders they had to make a final offer for 60% but that the local shareholders may decide to sell a stake and you are committed to buy what they want to sell. From a financing perspective it was not easy. Bidders had to be ready to buy 100%... and clearly it was at the same price per share.”

Nice Airport

Atlantia (65%), Aeroporti di Roma (10%) and EDF Invest (25%) on 9 November 2016 acquired the French government’s 60% equity and the Alpes-Maritimes Department decided to sell 4%. For the 64% stake, the consortium has paid €1.3 billion.

The enterprise valuation was about €2.1 billion, or about 20x Ebitda.

The Azzurra consortium remains in discussions with the Principality of Monaco, which is due to take an equity stake up to 12%. It is strategically interested as Nice Airport serves visitors to nearby Monaco, who travel there via shuttle bus or a short helicopter ride.

Azzurra raised a holding company acquisition debt package of €653 million, which has an all-in cost of 1.6%, and a hedging cost of 0.72%. Moody’s rated the senior debt Baa3, and the airport operating company Baa2. The leverage is 7.4x Ebitda, according to Moody’s.

The lenders are:

• Banca IMI
• Cassa Depositi e Prestiti
• MUFG
• MPS Capital
• UniCredit

Amir Jahanguiri, partner at Willkie Farr & Gallagher, says: “The leverage is pretty aggressive for a deal of this nature. That and the pricing are reflecting that they are very strong sponsors, it’s a very strong project and Atlantia used mainly relationship banks to work with.”

The airport’s existing debt is €130 million of bank facilities and a €100 million undrawn European Investment Bank loan for future capital expenditure. Existing debt is not being refinanced in the near-term, and the buyers obtained waivers and standstill where there were change of control clauses.

Atlantia’s network includes Aeroporti di Roma and a 21.3% stake in Venice airport group SAVE.

Christophe Bordes, head of power, energy and infrastructure corporate finance at Societe Generale Corporate & Investment Banking, comments: “Furthermore, the industry plan of the Azzurra consortium was perceived by the local authorities as the best one. It is a mix of development work and opening new routes, with the focus on Asia, North America and more point-to-point in Europe, although Nice is already quite well connected. Atlantia’s Rome airport is the most connected in Europe with China… The train is another area of development in light of the intermodal plan to be built by the local authorities. Currently they are planning to have a tram and a specific train station near the airport.”

Lyon Airport

Vinci Airports (51%), Caisse des Dépôts et Consignations (24.5%) and Predica (24.5%) acquired a 60% stake of Aéroports de Lyon on 9 November for €535 million, raising roughly €150 million of acquisition debt at holding company level. The enterprise valuation is about €1.05 billion.

That is equivalent to over 19x the 2016 Ebitda (about €55 million), which is a very similar final valuation to the roughly 20x Ebitda Nice’s buyers independently arrived at.

The €150 million acquisition debt has a seven-year bullet maturity and came from 10 lenders:

• Banca IMI
• La Banque Postale
• La Banque Postale Asset Management
• BNP Paribas
• La Caixa
• Crédit Agricole
• Crédit Industriel et Commercial
• RBS
• SMBC
• Societe Generale

There is about €150 million of existing operations company bank debt in place, which has not been refinanced at this stage. The acquisition is at a leverage of 7x the 2016 Ebitda.  

Advisers

For the French state Gide Loyrette Nouel was legal adviser. For Lyon, HSBC was financial adviser. For Nice, RBC and Mediobanca were financial advisers.

For Atlantia’s consortium, advisers included Societe Generale, Bank of America Merrill Lynch and Compagnie Financière du Lion, Willkie Farr & Gallagher and Leigh Fisher.

For Vinci’s consortium, advisers included Credit Agricole, Lazard, Rothschild, Allen & Overy and Linklaters.