3i pulls out of Gatwick bidding

One of the favourites in the bidding for Gatwick airport has pulled out of the auction amid speculation it was neither ready nor able to meet the £2bn price tag asked by Ferrovial.

BAA has dismissed the overvaluation claims by 3i Infrastructure, saying the market would dictate the price and it was confident of achieving offers at a significant premium to its Regulated Asset Base of £1.65bn.The 3i consortium includes the Ontario Teachers’ Pension Plan and Canada Pension Plan. It was regarded as one of the favourites to win the auction and its withdrawal, the second since the first round bidding deadline last month, is seen as blow to Ferrovial.
The auction now contains four potential buyers still remain. According to The Telegraph, the 12-bank lending syndicate backing 3i is now moving its funding to one of those alternative bidders.
3i, Britain’s largest quoted private equity group, has suffered in the downturn. Last month it announced that it was cutting the value of its largest 50 investments by 21 per cent. Falls in its share-price have wiped three quarters off its value.

The bidding process has been slowed by the Competition Commission, which will only publish its final report on airport ownership in the UK next month.

Once the commission makes its recommendation for the likely sale of Gatwick, Stansted and either Edinburgh or Glasgow, it will formally take over the sale of Gatwick, which may result in new bidding criteria.

“Our understanding is that they could not raise the financing,” one of 3i’s Gatwick rivals told The Times. Another said: “How can they claim to be pulling out because of the price when we have hardly got into that yet?”

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The confirmed remaining potential buyers are: Global Infrastructure Partners, a joint venture between General Electric and Credit Suisse; Deutsche Bank’s RREEF Infrastructure in partnership with Babcock & Brown; Citigroup with Vancouver Airport Services and John Hancock Life Insurance Company, bidding jointly as Lysander Gatwick Investment Group. And Manchester Airports Group and Canada’s Borealis which are also jointly involved.
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