Riyadh confirms US bank appointment for airport stake sale

27 July 2017

Saudi Arabia aims to privatise all airports by 2020

Faisal al-Sugair, chairman of the newly formed Saudi Civil Aviation Holding, has confirmed the appointment of US-based Goldman Sachs for the advisory role in the sale of a minority stake in Riyadh’s King Khalid International airport.

Al-Sugair did not provide further details in terms of the exact percentage of shares that will be offered to private investors.

It is understood that the client has not determined the exact percentage of shares to be sold to investors although sources in Saudi Arabia tell MEED they do not expect more than 20 per cent of the airport to be offered given its strategic nature as a national and critical asset.

No details have also been provided on the nature of the sale being considered. It is understood the government can consider one of three sale options, which include sale through an initial public offering (IPO), private equity or trade sale.

It should be noted that an IPO was planned by the aviation regulator, General Authority for Civil Aviation (Gaca), close to a decade ago for the kingdom’s three international airports.

In 2008, Gaca signed a $111.3m, six-year contract with Germany’s Fraport to operate and manage (O&M) King Abdulaziz International and Jeddah’s King Khaled International airports. A second $42.5m, six-year contract was signed with Singapore’s Changi Airports International for the King Fahd International airport.

At the time, both firms were tasked with improving the management of the airports, focusing on sustainable traffic growth and introducing commercial opportunities to establish them as independent companies in preparation for a planned stock market listing.

Under the terms, the airports were to be transferred back to Gaca upon expiry of the six-year contract as independent units so they can be part-privatised, with an IPO for each airport within three years.

In May, Changi International was appointed for the 20-year O&M contract for the Jeddah airport.

Saudi Arabia aims to privatise all airports in the kingdom by 2020.

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