German giant eyes up Desmond's €650m London airport
Sunday June 18 2006
GERMAN construction colossus Hochtief has emerged as a bidder for Dermot Desmond's €650m-valued London City Airport, which has been put up for auction by the billionaire businessman.
On Thursday, Reinhard Kalenda, chief executive of Hochtief's airport division, revealed that the group was mulling over an approach, with a final decision to be made within four weeks. Hochtief has linked up with Australian bank Westpac and Canadian pension fund Caisse de Depot et Placement du Quebec to create a special airport acquisition fund.
Frankfurt airport operator Fraport has also expressed an interest in London City Airport, with board member Manfred Schoelech suggesting it is "a possible target".
Cash-rich and acquisitive Spanish firms Ferrovial and Abertis Infrastructures are also said to be in the running to buy the airport, which will serve as one of the principal gateways to the London Olympics in 2012.
Investment bank Morgan Stanley has started the tendering process, which could see the airport sold off by mid September. Potential bidders were required to register their interest in the airport last Friday, providing details of funding capabilities.
Dermot Desmond paid stg£23.5m for London City Airport in 1995, buying what was then an underperforming asset from Mowlem.
At the time, the purchase was regarded by many as being a substantial risk, given that London's docklands area was suffering from recession, with the landmark Canary Wharf in receivership. However, the airport was turned around and has grown rapidly, becoming one of the busiest transit points in the UK.
The sale of London City Airport looks set to trump Desmond's investment in Baltimore Technologies as the IFSC-based financier's biggest score. Desmond put money into Fran Rooney's Baltimore at start-up stage in the mid-Nineties, before pocketing over €90m when selling shares in 1999.
