ADIA said to eye opportunities in India airport privatisations

The Abu Dhabi Investment Agency (ADIA) is among the international sovereign wealth funds and long-term investment funds in discussions with European and Southeast Asian airport operations for possible consortium arranged to bid for six state-owned Indian airports currently on offer for privatisation, according to sources.

A number of international and domestic airport operators and some leading infrastructure developers are currently in discussions with financial investors to put in place consortiums before forming up financial and technical bids for six airports in Indian cities, according to officials at leading management consultancy firms in India.

The Airport Authority of India (AAI) sent out requests for proposals (RFPs) on December 14 for the proposed privatisation of the six airports.

Luknow, Thiruvananthapuram, Jaipur, Ahmedabad, Mangaluru and Guwahati are the six brownfield airports for which RFPs have been issued.

ADIA is understood to be in talks with a leading European airport operator to be its consortium partner for bidding for some of the six airports on offer for privatisation.

According to sources, a management consultancy firm is assisting the two as they draw up the contours of their consortium structure and advising them on the details of the terms of conditions of bidding, existing aviation and non-aviation assets and in assessing current passenger and cargo traffic-related information about these airports.

When contacts, a spokesperson for ADIA told Arabian Business that the fund does not comment on possible investment plans.

International consultancy firm Deloitte is said to be assisting AAI in the privatisation process.

Sources said that the prospective bidders – private airport operators, infrastructure developers and financial investors – are currently taking the help of firms such as PwC, KPMG and EY to study the proposed terms and conditions for operation and management (O&M) and development, besides the revenue sharing model in the RFPs.

These firms will also help the bidders draw up bidding strategies based on their assessments of the existing operations and future development prospects of each airport.

The last date for the submission of bids of February 14. Technical bids will open two days later to decide the winner for each airport.

Officials at a number of consultancy firms said there seems to be increased interest from private investors, largely due to the proposed per passenger revenue sharing model, as opposed to the gross revenue model used in earlier privatisations in New Delhi, Mumbai and other cities.

“The current revenue-sharing model based on per pax is a straight model as there wouldn’t be any ambiguity about the numbers and the international investors are quite comfortable with it,” said a senior official at a consultancy who asked to remain anonymous because their firm is involved with one of the bidders.

Each bidders assessment about the prospective revenues from passenger traffic and non-aviation assets of the airports may differ, but ultimately they have to quote a revenue share per person based on their assessments of the two revenue streams, officials said.

The earlier model of revenue sharing, according to the officials, led to ambiguity in final revenue figures, causing friction between the AAI and concessionaires.

One prospective point of friction, they added, is because of uncertainty regarding any new government’s attitude towards privatisation.

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