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(Reuters) – SYDNEY, July 5 (Reuters) – Sydney Airport Holdings Pty Ltd (SYD.AX) announced on Monday that a group of infrastructure investors has offered a cash acquisition of the operator of Australia’s largest airport for A$22.26 billion ($16.7 billion), driving its shares up as high as 38 percent. If approved, it would be the largest deal in Australia this year, surpassing Endeavour Group Ltd’s (EDV.AX) $8.1 billion spin-off and Star Entertainment Group Ltd’s (SGR.AX) $7.3 billion bid for Crown Resorts Ltd. (CWN.AX). The Sydney Aviation Alliance, which includes IFM Investors, QSuper, and Global Infrastructure Partners, has offered A$8.25 per Sydney Airport share, a 42 percent premium to the stock’s Friday closing price. On Monday morning, its shares were trading at as high as A$8.04, before falling to roughly A$7.68. Sydney Airport said it was examining the proposal, which is reliant on providing access to due diligence and recommending it to shareholders in the absence of a better offer, and that it was below its pre-pandemic share price. The airport operator’s stock touched an all-time high of A$8.86 in January of last year, before the epidemic caused travel demand to plummet. The firm is the only publicly traded airport operator in Australia. If the purchase goes through, it will be owned by consortia of infrastructure investors, principally pension funds, with long-term investment objectives, similar to the country’s other major airports. According to the Association of Superannuation Funds of Australia, Australia’s mandated retirement savings system, known as superannuation, has assets worth A$3.1 trillion. With borrowing rates at all-time lows, funds are seeking for higher-yielding infrastructure investments. The offer comes as Australia’s international borders are widely likely to stay blocked until at least the end of the year, owing in part to a slower new coronavirus vaccination campaign than most developed countries. find out more After an outbreak of the extremely contagious Delta strain of COVID-19, a two-week lockdown in Sydney during the normally bustling school vacation time significantly hindered domestic travel. Residents of Sydney have been denied entry to other states. International travel at Sydney Airport was down more than 93 percent in May compared to the same month last year, while domestic traffic was down 39.2 percent. With the opening of Western Sydney Airport in 2026, the airport’s monopoly on traffic to and from Australia’s most populous city would come to an end. The Sydney Aviation Alliance stated that no significant changes to the airport’s management, services, operations, or target credit ratings are expected. The consortium claims that its members invest on behalf of more than 6 million Australians, and that they manage more than A$177 billion in infrastructure funds worldwide, including shares in 20 airports. Melbourne, Brisbane, Perth, and Adelaide are among the major Australian airports in which IFM has a stake. London’s Heathrow Airport is owned by QSuper, and Gatwick and City airports are owned by Global Infrastructure. UniSuper, the airport’s largest stakeholder with a 15% stake, must agree to reinvest its equity interest in the consortium’s vehicle in exchange for an equivalent equity position in the consortium’s vehicle. The Sydney Aviation Alliance stated, “This will serve to maximize the participation of Australian superannuation funds in the ongoing ownership of Sydney Airport.” UniSuper did not react to a request for comment, despite owning holdings in both Adelaide and Brisbane airports. Barrenjoey and UBS have been engaged as financial advisers by Sydney Airport. On Monday morning, shares at Auckland International Airport Ltd (AIA.NZ), Australasia’s only other publicly traded airport operator, were trading nearly 6% higher. (1 Australian dollar = 1.3294 dollars) Jamie Freed in Sydney and Scott Murdoch in Hong Kong contributed reporting; Nikhil Kurian Nainan and Soumyajit Saha in Bengaluru contributed further reporting; Stephen Coates and Christopher Cushing edited the piece. The Thomson Reuters Trust Principles are our standards./nRead More

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