Abu Dhabi buys Gatwick stake, Dubai World unit sells SpiceJet stake

Dubai may have found another oil field recently, but it is the neighbouring emirate of Abu Dhabi that has all the cash. Abu Dhabi provided USD10 billion in emergency funding late last year to Dubai (although recent reports suggest the figure was about half that) to help Dubai narrowly avoid a default on its massive debts. In the past few days, Abu Dhabi Investment Authority has moved to acquire a stake in London Gatwick Airport, while Dubai World's investment arm, Istithmar, sold its entire holding in Indian budget airline, SpiceJet, as part of its restructure.

Gatwick stakes changing hands

The world's largest sovereign wealth fund, Abu Dhabi Investment Authority (ADIA), has acquired a 15% Gatwick stake from Global Infrastructure Partners (GIP) for a reported GBP125 million (USD196 million), as it moves to increase its exposure to infrastructure assets.

Earlier in the week, South Korea's National Pension Service reportedly agreed to pay around GBP100 million for a 12% state in Gatwick, suggesting similar terms had been reached by Abu Dhabi.

GIP, led by Credit Suisse and General Electric, paid GBP1.51 billion paid for Gatwick last year (slightly below its regulated asset base of GBP1.57 billion). GIP, which is seen to be planning to sell up to 50% of its stake in Gatwick, has been seeking long-term investors for the asset.

See related report: GIP selling off Gatwick by the pound – is that what the airlines expected?

Istithmar sells SpiceJet stake

Meanwhile, the troubled Dubai World's investment arm, Istithmar World, has sold its entire holding in Indian budget airline SpiceJet to domestic mutual funds and a foreign institutional investor for USD35.2 million. Istithmar retains an interest in SpiceJet via its ownership of foreign currency convertible bonds (debt instruments with an option to convert into equity shares at a later stage).

Dubai World is seeking to sell assets, as part of a restructuring plan, and the SpiceJet exit price represents good value for Istithmar, with the sale price some 46% above the stock’s level at the end of Sep-2009. SpiceJet’s shares have more than tripled in value over the past 12 months. See today’s LCC share wrap for more information.

European airport shares sold off

European airport stocks were sold-off on Friday, reflecting broader market weakness. Among the falls were Venice (-5.2%), Copenhagen (-4.6%), Hochtief (-3.7%) and Vienna (-3.1%). BAA parent, Ferrovial, slipped 1.5%.

Selected airports daily share price movements (% change): 05-Feb-2010

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