"Australia's Macquarie Airports Debut Disappointing"

Wednesday, April 3, 2002

Australia's Macquarie Airports Debut Disappointing


SYDNEY -(Dow Jones)- Australia's Macquarie Airports (A.MAP) made a
disappointing debut on the Australian Stock Exchange Tuesday despite
strong interest leading up to the country's biggest security offering
this year.

The airport investment fund, brought to the market by Australia's only
listed investment bank, Macquarie Bank Ltd. (A.MCQ), opened at 99
Australian cents, a small discount to its A$1.00 initial public offer
price.

The airport investment fund closed at 98 cents, with 7.4 million
securities changing hands, after trading in a tight range of between 98
cents and A$1.00. The benchmark S&P/ASX 200 Index slipped 0.8% on
concerns about a rate hike Wednesday.

The Macquarie Airports IPO raised A$500 million, with, with around 65%
of the offer taken up by institutional investors.

A Sydney-based fund manager, who asked not to be identified, said the
debut was "disappointing" given that the retail offer was
oversubscribed. However, the institutional allocation had been scaled
back.

He said some investors were holding back to see what assets would be
added to the fund's portfolio before investing for the long term.

JB Were's head of private client research, Mike Kendall, said some
investors were "suffering general nerves about the global situation." 

He also noted investors were staying on the sidelines ahead of a
possible decision by the Reserve Bank of Australia to raise interest
rates Wednesday.

Eyes On Sydney Airport Bid

Macquarie Airports has a complex structure. Each security is
triple-stapled, comprising one unit in Macquarie Airports Trust 1, one
unit in Macquarie Airports Trust 2 and one share in Macquarie Airports
Holdings (Bermuda) Ltd.

The units and the shares are linked and can't be traded separately.

The A$500 million from the IPO has been earmarked for airport
investments including the A$136 million purchase of partly paid shares
in an existing private equity airport investment fund, Macquarie
Airports Group, or MAG.

That investment will give Macquarie Airports 37% in MAG, which owns a
50% stake in Bristol Airport and 24% of Birmingham Airport Holdings
Ltd., both in the U.K.

Of the remaining A$364 million from the raising, A$246 million will be
set aside for future calls on MAG shares.

MAG is bidding for Sydney Airport, Australia's biggest airport, as part
of the Southern Cross Airport Consortium.

Barclays Global Investors Portfolio Manager David Walsh said Macquarie
Airports securities "will go through the roof" if MAG's bid for Sydney
Airport is successful.

"Any reevaluation of assets that this company actually takes on will be
very positive for it because there's a lot of implied value built into
the stock which is not there yet," he said.

Macquarie Airports Managing Director Kerrie Mather said no final
decision on the final sale date has been made by the Australian
government.

Another A$84.9 million of the A$500 million raised has been earmarked
for future airport investments, and A$33.1 million will cover working
capital and the expenses of the offer.

Macquarie Airports is weighting up 20 airport investments in seven
countries, including Italy, Germany, Australia and New Zealand.

"There are significant opportunities arising at a number of European
airports with sales processes either announced or in the pipeline,"
Mather said.

A stake in Florence Airport is up for sale, while there are expectations
that a stake in Rome's airport will be put on the market alongside a
number of regional Italian airports, she added.

A second A$500 million offering is planned for October, again at A$1 a
security.


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