Sydney Aviation Alliance prepares for landing at Sydney Airport
Nov 1, 2021 – 9.35pmThere’s some undeniable proof of life in IFM Investors and Global Infrastructure Partners’ camp as they home in on their record-breaking acquisition of Sydney Airport.
Two weeks after the suitors wrapped up due diligence, the pair’s run to the corporate regulator to get their legal structures sorted, lobbing documents as recently as the end of last week.
As passengers start returning in greater numbers to Sydney Airport, its suitor is getting its own house in order. Kate Geraghty
The forms, filed with the help of their lawyers at Allens, have all the hallmarks of a bidder ready to finalise its long awaited swoop: there’s representatives from both IFM and GIP named as directors, entities owned by their respective funds as shareholders and a whole family of new companies under their “Sydney Aviation Alliance” moniker. (IFM and GIP are the Sydney Aviation Alliance’s two anchor investors and spearheads.)
It’s the sort of late back office preparations that wouldn’t be likely to happen if the deal wasn’t on track for a smooth landing, or at least a signing. Remember the consortium has been working to firm up its $8.75 a security offer, valuing Sydney Airport at about $32 billion including debt, having already obtained Sydney Airport board’s blessing at that level.
The deal’s expected to be signed this week.
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It comes as some fast money funds had grown nervous in the past fortnight, given the time it has taken for Sydney Aviation Alliance to firm up the whopper bid.
Those fears had been batted away by assurances that such a big bid involving at five consortium members (if you separate IFM’s Australian and global funds), an existing shareholder rolling into the vehicle, regulatory restrictions and a $23.6 billion-odd equity cheque needed more than four weeks to stitch up.
Still, solid proof of life is expected to be taken as a positive signal. Sydney Airport shares closed at $8.20 on Monday, which was a 6.3 per cent discount to the indicative offer price.
Should the deal be signed as expected in coming days, attention will turn to required regulatory and shareholder approvals, which could both stretch well into the new year.
The ACCC kicked off its informal review in early October, asking airlines, aircraft owners and other aviation services groups to lob their submissions into the mix by October 28.
The review is likely to require IFM to explain why its funds should be allowed to own a substantial stake in a privately-held Sydney Airport, when its Australian infrastructure fund already has stakes in nine Australian airports.
IFM’s cross ownership is something the fund manager, its lawyers and consortium partners have grappled with for years. Under Australia’s Airports Act, no one investor can own more than 15 per cent of two major Australian airports (Sydney and Perth, Sydney and Brisbane, or Sydney and Melbourne), in a bid to try to stop airport owners ripping off airlines and/or their passengers.
Barrenjoey, UBS and Allens are advising Sydney Airport, while the bidder has Goldman Sachs, Macquarie Capital and Herbert Smith Freehills in its corner.
Sydney Aviation Alliance prepares for landing at Sydney...
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