Jarden, Macquarie tapped for $NZ1.4bn Auckland Airport raise

Auckland Airport is raising $NZ1.4bn. Picture: iStock

Anticipation of a rate cut by the Federal Reserve this week continues to breathe life back into the equity capital markets, with selldowns by block investors and Auckland International Airport now raising equity.

The latest to emerge on Monday, Auckland International Airport’s raise of $NZ1.4bn, was well-supported, already covered not long after announced to the market and could be followed by other deals.

In the instance of the AIA, it came after the stock had been trading down from its highs of around $8 this year.

Investors had been anticipating that the $10bn listed airport owner would source fresh funds from the market to pay for its $NZ6.6bn capital spending program that includes a new $NZ2bn domestic jet terminal, and other work such as around the airfield and baggage facilities.

The work began in 2022 and 23 per cent of its infrastructure program is complete.

The build program will take five years, and Downer’s subsidiary Hawkins has been awarded a $NZ800m contract to manage the jet terminal work.

Also, potentially on the cards is another selldown by the Auckland Council by way of its newly formed Auckland Future Fund, which holds 11 per cent and hopes to use the funds to create portfolio diversification.

Auckland Council last year offloaded a 7 per cent stake in Auckland Airport, worth $NZ800m, to pay down debt.

Working on Monday’s raise was Jarden and Macquarie Capital.

Of the $NZ1.4bn ($1.29bn) being secured by AIA, $NZ1.2bn is by way of a fully underwritten placement and a further $NZ200m through a retail offer in a deal that still sees it retain its A- S&P credit rating and dividend policy.

Jarden worked on the airport’s $NZ1.2bn equity raise in 2020 along with Credit Suisse and Citi amid the pandemic, underwritten a $NZ4.50 floor price and heavily taken up.

Auckland Airport is listed in Australia and is currently the third-largest company on the NZX by market capitalisation.

Shares are being sold at $NZ6.95, a 7 per cent discount to its last close of $NZ7.48 on the NZX (they closed on the ASX at $6.95).

AIA said the raise enabled it to replace aging infrastructure built in the 1960s ahead of anticipated increasing passenger demand.

Proceeds would also be used to repay a $NZ150m bond maturing in October and for a $NZ100m of unhedged drawn facilities to provide funding flexibility.

Meanwhile, Auckland Airport passenger numbers are up 12 per cent on the past year but down 2 per cent for the financial year to date and down 1 per cent for the current month.

Last week, NextDC also tapped the market for $700m and National Storage REIT launched a corporate bond worth $300m, while Greatland Gold raised about $500m in the UK to fund its Telfer gold mine acquisition.