Hungary’s PM launches new effort to gain control of Budapest airport

Hungary’s prime minister Viktor Orban has launched a new effort to wrest control of Budapest airport from its international investor owners.

The government has submitted a second offer to buy the airport after the first was rejected as too low this summer, according to two people familiar with the matter. The offer price for the airport could not be determined.

The airport, which was fully privatised in 2011, is majority owned by Canada’s Public Sector Pension Investment Board, which holds a 55 per cent stake through its German-based airport investor AviAlliance.

GIC, the Singaporean sovereign wealth fund, owns 23 per cent, while a second Canadian pension fund manager, Caisse de dépôt et placement du Québec (CDPQ), owns the remaining 21 per cent stake.

AviAlliance and CDPQ declined to comment, while Singapore’s GIC did not respond to a request for comment.

The Hungarian government declined to comment, but in May announced it would make a co-ordinated effort to buy back a majority stake in the airport.

Budapest airport’s departure hall © Akos Stiller/Bloomberg

The persistent interest from the government comes despite the consortium of foreign investors repeatedly declaring their desire to keep hold of the asset, which is thought to have big growth potential.

The owners said in May they were “committed to the airport in the long run”, while in July AviAlliance said it “deeply hope[d] to be given the opportunity to remain invested in this airport” when it confirmed the first non-binding offer from the government.

But the Orban government has made regaining control of key Hungarian infrastructure and other assets a priority and it raised the equivalent of €4.4bn in a series of foreign currency bond issues last month.

A person familiar with government plans said part of the proceeds of the bond issue could finance the airport deal.

“It is difficult to evaluate an airport without having proper capex plans and traffic forecasts, but for an initial ballpark figure I would expect the airport to be valued somewhere between €4bn to €5.5bn,” said aviation consultant Martin Fossati.

Orban has already reshuffled ownership of the country’s infrastructure in other ways this year. His government has moved to place about 2,000km of motorways and public roads into a 35-year concession, including projects to expand the network by hundreds of kilometres.

He has signalled that he is targeting domestic majority ownership in key sectors, including finance and retail, as well as gaining control over infrastructure assets.

Orban has criticised the airport’s privatisation for years and his government has in the past threatened to wrest control of the airport from its current owners.

The consortium of foreign owners first invested in the airport in 2007 when they took a roughly 75 per cent stake. They acquired the remaining 25 per cent from the Hungarian state in 2011.

The eastern European aviation market is expected to grow rapidly as incomes rise and people travel more, including switching to air from road and rail.

Only 3.9m passengers used the airport in 2020, but passenger numbers had grown rapidly in previous years, from 11.4m in 2016 to 16.2m in 2019.

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