"Changi Plans to Purchase Stakes in Up to 15 Airports"

Thursday, January 3, 2008

Changi Plans to Purchase Stakes in Up to 15 Airports
By Chan Sue Ling
Bloomberg


Changi Airports International Pte, the overseas investment unit of
Singapore's main airport operator, plans to buy stakes in as many as 15
airfields, about half in China, Chief Executive Officer Chow Kok Fong said. 

The company aims to manage $700 million of airport assets in the next three
years, Chow, 55, said in an interview in Singapore yesterday. Overseas
revenue may climb to as much as 20 percent of sales in five years from less
than 5 percent now. 

Chow wants to tap growth in the Middle East, China and India, where
governments are upgrading airports as rising incomes enable more people to
fly. Global passenger air traffic may jump 29 percent by 2011, threatening
to overwhelm airports, according to an October forecast by the International
Air Transport Association. 

``Travel numbers are going to keep growing,'' said Michael Birch, who
oversees about $140 million at Wallace Funds Management in Sydney. ``In
countries where there is only one airport, it makes sense to buy such assets
because it's a monopoly.'' 

Changi Airports was set up as Changi Airport Managers and Partners
(Singapore) Pte in 2004 by the Civil Aviation Authority of Singapore, and
renamed two years later. 

The company secured its first direct investment in China last month,
acquiring a 29 percent stake in Nanjing Lukou International Airport for $138
million. 

Targeting China 

Funding for future purchases will mainly come from its parent, Chow said.
The Civil Aviation Authority had net income of S$415 million ($289 million)
for the year ended March 2007, compared with S$448 million the year before. 

``We are looking at several deals, which we hope will crystallize over the
next three years,'' Chow said. ``A lot of the growth that we expect in China
will come from the central and western region. So, we will be spending a lot
of our efforts in that region.'' 

Airports are benefiting from deregulation and a surge in travel as budget
airlines lure more tourists. 

The sheikdom of Dubai, in the United Arab Emirates, has earmarked $82
billion to create a transport hub for the Persian Gulf. India is selling
stakes in its biggest airfields to help pay for $10 billion in investments
over seven years to support travel growth in the world's second-most
populous country. 

Changi Airports shifted its focus in 2006 to investing overseas, as opposed
to just offering consulting and advisory services. The company may consider
setting up a trust for its assets, Chow said. 

Singapore Investments 

State-controlled Singapore companies including Temasek Holdings Pte and
Singapore Telecommunications Ltd. have increased their overseas investments
in recent years to boost returns and reduce their reliance on the city
state. 

Set up in 1974 to run Singapore's state assets, Temasek also has stakes in
ICICI Bank Ltd. of India, Bank of China Ltd. and Standard Chartered Plc. 

In China, Changi Airports is seeking stakes outside of the main airports in
Beijing, Shanghai, Guangzhou and Shenzhen. 

``There are about 20 other airports which are trying to get a slice of the
international traffic,'' Chow said. 

China plans to boost its number of airports to 220 by 2020 from 147 in 2006,
according to the General Administration of Civil Aviation. The country's
outbound journeys, which have almost tripled over the past five years, may
triple again to 100 million by 2015, the World Tourism Organization
estimates. 

Changi Airports also has a venture with Shenzhen Airport Group Co. to invest
in and manage smaller airports. 

Opportunities In India 

Changi Airports, which in 2005 pulled out of a race for a stake in India's
New Delhi airport, has teamed up with the Tata Group to bid for other
projects in the South Asian nation. 

``We are looking, together with Tata, at some of the equivalent of secondary
airports in India,'' Chow said. ``One of the airports that has been
announced for privatization is Amritsar. That's one airport we're looking
at.'' 

Other key markets included Vietnam, where the company has signed a
preliminary agreement to develop the Phu Bai airport in Hue province, and
Russia. 

``We're concentrating on Russia and we have taken a look at one or two
airports in Europe,'' Chow said. ``We have not made a firm decision but
clearly one of the biggest privatizations in the market is Prague.'' 

Changi Airports faces competition for assets from companies including
Fraport AG and Australia's Macquarie Group Ltd. 

Fraport, owner of Frankfurt airport, bought a stake in China's Xian airport
last year and raised its holding in the operating company of Lima airport in
Peru. It runs two terminals at Antalya, Turkey, and has a contract to
operate all three of its terminals by September 2009. It has also invested
in India. 

Macquarie, the world's largest private manager of infrastructure such as
airports and toll roads, in December led investors to buy Hobart
International Airport Pty in the Australian state of Tasmania. 

The Civil Aviation Authority runs Singapore's main airport, which is called
Changi. The airport, Asia's fifth-busiest and winner of more than 250
awards, will open a third terminal next week, allowing it to handle 50
percent more passengers. 


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