CAPA's 170-page "Global Airport Finance and Privatisation review 2016 – the day has come for the PPP" is is the fourth in a series of CAPA reports on airport privatisation and investment published since Jan-2015.
During that time a number of deals have been concluded and announced across the world though their volume remains below the levels prior to 2008. One of the key trends is an identifiable increase in activity in public-private partnerships (PPPs) globally.
In a world where obtaining a viable return on investment remains a difficult task it is evident that investor sentiment once again favours long term transport infrastructure. Airports are among the well tested models for investment.
The inexorable rise of the Airport Investment Funds
In 2016 the picture is quite different from where it was two years ago. Many of the entities listed in the Airport Investor Database are funds of one kind or another – general investment, pension, hedge, private equity, sovereign wealth and so on (even though hedge funds typically chase more liquid assets). ey have constituted the fastest- growing segment for several years and continue to do so.
At the time of writing there are no fewer than 102 of them (14.9% of the total) that are known to CAPA; in many cases they are competing head-on with the investment banks, whose modus operandi is to invest in a project and then issue the related project bonds in the secondary capital markets. (One competitive advantage for the banks does remain, in the form of the prevailing low interest rate).
Investor sentiment for transport infrastructure
Investor sentiment is once again favouring long term transport infrastructure, even while most of the world’s airports continue to lose money. There is a widening gulf between the large hubs and medium sized gateways on one hand and the smaller secondary level airports that are heavily reliant on low cost carriers on the other.
Smaller airports are most in need of investment but conversely they find it harder to attract it. Many of them are no longer considered to be ‘long term’ by investors even though the market share of budget airlines (seats) is still over 25% worldwide (Jan to Aug-2016).
Chinese funds are active
PPPs are on the rise
Brazil is nearing completion of its privatisations
Despite its strong economy, India's erratic policies are deterring investors
And Greece is embarking on another 23 concessions
These are just a few of the matters covered in CAPA's 170-page report "Global Airport Finance and Privatisation review 2016 – the day has come for the PPP".
For information and to purchase a copy, please connect to CAPA Airport Privatisation 2016 170pp