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Spain's AENA tempts investors with fat dividend

Source: Reuters - Mon 13th Oct 2014
Spain's AENA tempts investors with fat dividend

Banks handling the sale of Spain's AENA will aim to convince investors to come on board with the airport operator's commitment to pay half its profit in dividend during an incipient economic recovery, according to one of the banks in the closely-guarded sale process.

The sale of a 49% stake in AENA is expected to value all of the world's largest airports operator at up to around EU5 Bln, sources close to the company say.

But lead banks Santander, BBVA, Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley have yet to provide a valuation and an indicative price range, something due in the share prospectus to be published this month.

Doubts linger over the sale since it emerged last week there were fewer than expected bids for the core 21% stake in the first leg of the process, as well as questions over the strength of the European recovery and faltering investor appetite for European stock market listings.

Core shareholders will be announced later this week, with the 21% core stake due to be divvied up between Spain's Ferrovial and Corporacion Financiera Alba and British fund TCI.

Spain is emerging from a five-year recession and the partial privatisation was given the government go-ahead in June after a year of shifts over timings and the size of stake to be offered.

Nevertheless, many are still confident AENA can go ahead.

"Spain is on everyone's books at the moment, and with the economy growing again, this is not a bad time to be offering this asset," said one banker not involved directly in the sale.

Sources close to the process insist several major investors showed firm indications of interest in pre-marketing for the main share sale of 28% of the company.

AENA, which runs 46 airports in Spain alone and has stakes in another 15 airports internationally, is expected to be listed on the bourse before the end of November.

"Earnings before interest taxes, depreciation and amortization (EBITDA) has almost doubled since 2011, with margins reaching 54%, comparing favourably to the industry average of 40%," the research report said.

The valuation expects debt to fall to around 4.2 times EBITDA in 2017 from 7.1 times in 2013, or around EU11.4 Bln in 2013.

Profit growth of 19% is expected in 2015, sliding to around 11% by 2017 to a total of EU769 Mln, the documents showed.

AENA will pay out half of expected profit in dividends from 2015, equivalent to EU299 Mln that year and roughly in line with peers such as Germany's Fraport.

European airports are outperforming the overall stock market by 18% year to date, research

Banks handling the sale of Spain's AENA will aim to convince investors to come on board with the airport operator's commitment to pay half its profit in dividend during an incipient economic recovery, according to one of the banks in the closely-guarded sale process.

The sale of a 49% stake in AENA is expected to value all of the world's largest airports operator at up to around EU5 Bln, sources close to the company say.

But lead banks Santander, BBVA, Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley have yet to provide a valuation and an indicative price range, something due in the share prospectus to be published this month.

Doubts linger over the sale since it emerged last week there were fewer than expected bids for the core 21% stake in the first leg of the process, as well as questions over the strength of the European recovery and faltering investor appetite for European stock market listings.

Core shareholders will be announced later this week, with the 21% core stake due to be divvied up between Spain's Ferrovial and Corporacion Financiera Alba and British fund TCI.

Spain is emerging from a five-year recession and the partial privatisation was given the government go-ahead in June after a year of shifts over timings and the size of stake to be offered.

Nevertheless, many are still confident AENA can go ahead.

"Spain is on everyone's books at the moment, and with the economy growing again, this is not a bad time to be offering this asset," said one banker not involved directly in the sale.

Sources close to the process insist several major investors showed firm indications of interest in pre-marketing for the main share sale of 28% of the company.

AENA, which runs 46 airports in Spain alone and has stakes in another 15 airports internationally, is expected to be listed on the bourse before the end of November.

"Earnings before interest taxes, depreciation and amortization (EBITDA) has almost doubled since 2011, with margins reaching 54%, comparing favourably to the industry average of 40%," the research report said.

The valuation expects debt to fall to around 4.2 times EBITDA in 2017 from 7.1 times in 2013, or around EU11.4 Bln in 2013.

Profit growth of 19% is expected in 2015, sliding to around 11% by 2017 to a total of EU769 Mln, the documents showed.

AENA will pay out half of expected profit in dividends from 2015, equivalent to EU299 Mln that year and roughly in line with peers such as Germany's Fraport.

European airports are outperforming the overall stock market by 18% year to date, research said, after a 12% outperformance last year. AENA's network saw passengers up 5.2% yr/yr in September.

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