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London City airport owner set for sky-high profit from sale London City airport owner set for sky-high profit from sale
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The private equity owner of London City airport is set to pocket more than £1bn after putting the fast-growing facility up for sale. The private equity owner of London City airport is set to pocket a profit of more than £1bn after putting the fast-growing facility up for sale.
Global Infrastructure Partners, which bought the east London airport from Irish businessman Dermot Desmond for £750m in 2006, has decided to sell its 75% stake. City is GIP’s longest-held asset.Global Infrastructure Partners, which bought the east London airport from Irish businessman Dermot Desmond for £750m in 2006, has decided to sell its 75% stake. City is GIP’s longest-held asset.
Another US fund, Oaktree Capital, is understood to have agreed to sell its 25% stake as well. The airport is thought to be worth as much as £2bn, though GIP declined to comment on the price.Another US fund, Oaktree Capital, is understood to have agreed to sell its 25% stake as well. The airport is thought to be worth as much as £2bn, though GIP declined to comment on the price.
Related: Senior executives urge parliament to prioritise third runway at HeathrowRelated: Senior executives urge parliament to prioritise third runway at Heathrow
The airport is aimed at business travellers who like its proximity to the financial centres of Canary Wharf and the City, as well as its short check-in times.The airport is aimed at business travellers who like its proximity to the financial centres of Canary Wharf and the City, as well as its short check-in times.
Ten airlines including BA Cityflyer, CityJet and Flybe operate flights to 50 European destinations, as well as a New York service.Ten airlines including BA Cityflyer, CityJet and Flybe operate flights to 50 European destinations, as well as a New York service.
GIP and a consortium of investors also own Gatwick, the UK’s second busiest airport, which they bought for £1.5bn in 2009, and GIP bought Edinburgh airport in 2012 for just over £800m. The firm has no plans to sell its stakes in either.GIP and a consortium of investors also own Gatwick, the UK’s second busiest airport, which they bought for £1.5bn in 2009, and GIP bought Edinburgh airport in 2012 for just over £800m. The firm has no plans to sell its stakes in either.
A spokesman for City airport said: “There is an enormous amount of potential in LCY and the market for quality assets, and particularly airport assets, is strong. It is the right time to sell for the investors.”A spokesman for City airport said: “There is an enormous amount of potential in LCY and the market for quality assets, and particularly airport assets, is strong. It is the right time to sell for the investors.”
City handled 3.65 million passengers last year, up 8% on 2013, and the total is expected to exceed 4.1 million this year.City handled 3.65 million passengers last year, up 8% on 2013, and the total is expected to exceed 4.1 million this year.
The sale process will not affect operations or expansion plans. The airport is trying to win planning permission for a £200m expansion that would allow seven more planes to be handled, increase passenger numbers to 6 million by 2023 and allow airlines to offer flights to destinations in the Middle East, Russia and the US.The sale process will not affect operations or expansion plans. The airport is trying to win planning permission for a £200m expansion that would allow seven more planes to be handled, increase passenger numbers to 6 million by 2023 and allow airlines to offer flights to destinations in the Middle East, Russia and the US.
The plans were approved by Newham council in February but blocked by London’s mayor, Boris Johnson, the following month due to noise concerns. The airport has appealed against Johnson’s decision and a ruling is expected next year.The plans were approved by Newham council in February but blocked by London’s mayor, Boris Johnson, the following month due to noise concerns. The airport has appealed against Johnson’s decision and a ruling is expected next year.
In 2009, City was granted permission to increase its flight movements from 70,000 to 120,000 a year.In 2009, City was granted permission to increase its flight movements from 70,000 to 120,000 a year.