Guangzhou Baiyun International Airport Co Ltd (GBIAC) last week confirmed plans to issue shares through a private placement to acquire USD256 million of assets from its parent company, Guangdong Airport Management Corp. Under the agreement, GBIAC would acquire two runways, taxiways and an aircraft parking area at Guangzhou Baiyun International Airport. GBIAC would issue as many as 150 million shares to fund the purchase.
In Oct-06, Beijing Capital International Airport Co Ltd (BCIA) also entered into an assets transfer agreement with its parent company, Capital Airports Holding, acquiring a runway and terminal buildings (due to be completed in 2007), for approximately USD2 billion. Hong Kong-listed BCIA will sell shares domestically for the first time, aiming to raise approximately USD505 million, to fund the purchase.
According to China CITIC Bank, “the [Guangzhouprivate placement] share issue makes it easier for the company to attract overseas investors, as it will have improved assets”. GBIAC is reportedly in discussions with companies including Airport Authority of Hong Kong and Fraport about co-operation and possible investment.
The planned listings are yet another indicator of the need for private capital to fund China’s airport expansion. CAAC forecasts the Mainland airport sector will report an average growth rate of 11% from 2006 to 2020. CAAC is expected to finance most of the funding burden through means such as passenger airport construction fees. However, as signaled by Guangzhouand Beijing, private investment opportunities in Chinaare expected to continue to arise.
