UBS courts investors for $780m Auckland Airport block trade

Auckland Council is selling down its holding in Auckland International Airport. Picture: iStock

Investment bank UBS is believed to be sounding out investors for a sale of a stake in the $NZ12.2bn Auckland International Airport.

It is understood that the investment bank mandated for the trade is targeting institutional investors as buyers after initially targeting strategic buyers.

While some believed that a trade is imminent, others say it is likely to happen after the group has reported its results on August 24.

On offer is a 7 per cent stake in Auckland Airport that is owned by the Auckland Council in a deal that could be worth about $780m.

The sale is part of the council’s move to pay down debt and expectations are that shares will likely be sold at a discount of between 2 and 5 per cent to their last traded price.

Already, sources say that investors have been approached about their potential interest in a sale.

UBS is likely to go back to the council and adviser Flagstaff Partners for approval to execute a trade once a deal is close to being finalised.

Initially, Auckland council mayor Wayne Brown proposed to sell the council’s 18.09 per cent stake in Auckland Airport to pay down debt.

But after failing to gain councillor support for that proposal, it was changed to a partial sale of the council’s shares – 7 per cent – and it gained the approval needed to proceed.

Infrastructure investors had been targeted, such as NZ Super, Infratil and Macquarie Group.

But now rather than a strategic deal, it would be a straight block trade, say sources.

Auckland Airport is listed in Australia with a $12bn market value, as well as in New Zealand, and has been on a roll in terms of share price performance with the resumption of travel since the pandemic.

Yet shares have slid from about $8.36 in May to $7.51.

And they are yet to return to their highs of 2019 when the stock was worth more than $9.

A $NZ1.2bn raise in 2020 at the onset of the pandemic proved hugely popular when Citi, Jarden and Credit Suisse were involved.