Changi swoops into Auckland Airport

By GEOFF SENESCALL

Singapore's Changi Airport is expected to lift its stake in Auckland International Airport after landing North Shore's 7.14 per cent holding.

According to brokers Changi has shown its hand by paying a premium to where the shares were trading to buy just a toe hold in New Zealand's international flagship airport.

Arthur Lim of broker Ord Minnett said the only way to interpret its move was that "Changi is serious about becoming the major shareholder in the local airport company."

It would unlikely be happy to sit on such a small stake, he said.

Changi's $87 million purchase comes just months after it was understood to have enlisted the services of a broker to bid for Auckland City Council's 25.8 per cent stake. However, the council deferred any decision to sell until next May.

Brokers believed, having signalled its intentions, it was a risky strategy to wait around until then as other international airport companies would also be competing to buy the key shareholding it came up for sale.

Unless Changi felt it would outbid the others, its best option was to cement its position before then by standing in the market for more shares, brokers said.

Aside from Auckland City Council and Manukau City Council (holding 9.64 per cent) the airport register was wide open.

Changi, which has around $3 billion in cash sitting on its balance sheet, could take a controlling stake in Auckland airport even if both parties decided not to sell.

If it did this would negate the strategic value of the councils respective holdings.

Changi is owned by the Civil Aviation Authority of Singapore. In the year to March 1999 it reported total operating income of $S776 million and achieved a net surplus of $S415 million.

Its move has the support of Auckland airport's management.

Managing director John Goulter said: "We have copied a lot of things from them over the years. We have talked to them a lot over things we have copied. They have been very helpful and they've learnt a few things from us."

It was "a feather in the airport's cap" that Changi, one of the world's best run airports, chose Auckland as its first overseas investment, Mr Goulter said.

Bids for the North Shore stake closed last Friday. Changi's purchase price is below the 300c a share that the council is understood to have been gunning for.

Fear that the council's shares might not find a trade buyer saw the airport share price slump to around 270c in recent days.

Acting for Changi was broker ABN Amro. Among the other bidders are to be have been a consortium which included TBI Plc, the company which recently bought the airport interests associated with AGI from Lockheed.

Several institutions were also believed to have been scoped by brokers to put in a bid.

The airport shares closed up 16c at 296c.