Auckland Airport off map's radar

By NZPA

Wednesday 24th October 2007

Macquarie Airports Ltd (MAp) is poised to make large acquisitions and could be targeting listed airports in Switzerland and Mexico, according to broker Merrill Lynch.

But research analysts Matthew Spence, Baden Moore and Nathan Gee do not believe Auckland Airport fits MAp's earnings growth criteria.

The analysts said MAp had $A1.5 ($NZ1.80) billion in cash, which could increase to $A1.75 billion by the end of December.

The cash estimate is on top of the $A112 million MAp spent yesterday acquiring another five percent of Brussels Airport from the Belgian government.

Larger acquisitions are likely to follow with airports in Switzerland and Mexico aligning closely with the Macquarie Bank Ltd-backed fund's investment criteria, the analysts said.

Unique Zurich Airport (Unique) in Switzerland is the manager of the Zurich Airport and eleven other airports globally including operations in India, Columbia, Chile, Honduras and Venezuela.

According to the Merrill analysts, Unique is attractively priced and fits other MAp investment criteria, in that it is based in an OECD country, has strong earnings growth potential and an acquirer may take a controlling stake.

"The market capitalisation of $US2.3 ($NZ3.08) billion is the size of acquisition MAp could fund if it partnered with another Macquarie vehicle," the analysts said.

Fast-growing airports in China did not fit MAp's OECD-country criteria.

Grupo Aeroportuario del Pacifico (GAP) in Mexico also could be an attractive target for MAp, the analysts said.

With a market capitalisation of $A2.87 billion, GAP operates 12 airports through the Pacific region of Mexico and its shares are trading at a slight discount to MAp's.

Again, its large size means MAp would probably have to team with other Macquarie Bank Ltd funds to buy in.

Macquarie Infrastructure Group Ltd recently partnered with Mexican businessman Carlos Slim to bid for some Mexican toll roads.

Merrill also thinks MAp will consider investing in some unlisted airports in Lisbon, regional France, Prague and Chicago, but not until fiscal 2009.

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