Tue. Dec 7th, 2021

The board of Sydney Airport has agreed to buy out a consortium led by Melbourne-based IFM investors for A $ 23.6 billion (US $ 17.5 billion), in one of Australia’s largest transactions ever, as pension funds and asset managers continue to explore the country’s infrastructure. .

The consortium, known as the Sydney Aviation Alliance, offered the airport A $ 8.75 per share, a premium of 6.3 percent on Friday’s closing price.

The agreement came as travel resume in Australia after more than a year and a half of severe restrictions that essentially closed the country’s borders. It also followed months of post-airport negotiations reject an initial offer of $ 17 billion in July, citing expectations of a recovery as the closures eased.

David Gonski, chairman of Sydney Airport, described the agreement as “the culmination of months of commitment between all parties” in a submission to the Australian Securities Exchange on Monday, adding that the new bid “reflects appropriate long-term value for the airport”. .

The final takeover will be subject to a shareholder vote, which is expected in the first quarter of next year.

The deal was the latest in a series of plays by global investors for Australian infrastructure assets. Canadian asset manager Brookfield last week announced its offer for energy utility AusNet to A $ 10.2 billion, while the board of directors of Spark Infrastructure accepts a buyout bid of A $ 5.2 billion in August from a consortium led by the private equity group KKR.

The consortium’s initial bid of A $ 8.25 a share was followed in August by a sweetened offer of $ 8.45. The current, higher bid was made in september, when the airport agreed to a period of four weeks for due diligence.

Sydney Airport has said the new offer represents a $ 1.3 billion premium on the first approach in July.

Nathan Lead, senior research analyst at Morgans, said pension and pension funds had increased allocations to Australian infrastructure as they targeted assets that a significant hit of the coronavirus pandemic, but is expected to recover in the long run.

“There is a lot of capital out there looking for investment opportunities. [But] there are not so many high quality infrastructure assets available, ”he said.

At the 2020 financial year, Sydney Airport made losses after income tax expenses of US $ 107.5m, down from US $ 215m the year before, as passenger traffic fell by 75 per cent year-on-year and revenue tumbled by 51 per cent.

Lead added that before the pandemic, the airport’s shares traded at almost A $ 9 per share, but have fallen to less than $ 5 per share since the strike.

Saul Eslake, an independent economist and fellow at the University of Tasmania, said the spending spree was backed by the “substantial” capital held by Australia’s pension funds, which he said, at more than A $ 3tn, the third or fourth largest in the world, behind the US, the UK and the Netherlands.

Eslake noted that Australia’s population growth, which was fueled by immigration and stood at about 1.5 percent in 2019 before the pandemic closed the country’s borders in March last year, surpassing the OECD average of 0.6 percent.

With all Australian employers contributing 10 per cent of wages to pensions, funds have had plenty of capital to spend, he said.

Shares at Sydney Airport closed 2.8 percent on Monday. The stock has risen more than 40 percent since the initial takeover bid in July.

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