Report: GIP wants to increase Gatwick leverage

Partner Michael McGhee said at a transport conference in Barcelona that the fund manager plans to increase the airport’s debt-to-regulated asset base ratio to between 60% and 65% from its current 43%.

Michael McGhee, the partner at Global Infrastructure Partners (GIP) who led the acquisition of London’s Gatwick airport, has said at a transport conference in Barcelona that the $5.64 billion fund manager plans to borrow more against the airport, Reuters reports.

London's Gatwick Airport

“We estimate the debt-to-regulated asset base (RAB) ratio (at the time of Ferrovial’s acquisition of BAA) to have been around 75 to 80 percent, whereas we had 43 percent,” McGhee told the Transfin 2010 conference in Barcelona, adding:

“The availability of debt in the first half of last year probably reached rock bottom. We would think [Gatwick’s] debt would increase over time, we will extend the maturity a bit later in the bond markets.” McGhee said Gatwick’s debt-to-RAB ratio could end up at between 60 percent and 65 percent.

The announcement comes as GIP adds another partner to its successful equity syndication for Gatwick. As previously reported on, the California Public Employees’ Retirement System – the biggest US pension fund with over $200 billion of assets – recently acquired a 12.7 percent stake in Gatwick for about $155 million. This represented the organisation’s first direct infrastructure investment.

The US pension followed in the footsteps of the Abu Dhabi Investment Authority and South Korea’s National Pension Service, which bought similar-sized stakes in Gatwick, the UK’s second-largest airport. Following its latest divestment, GIP has syndicated close to 40 percent of Gatwick’s equity for some $486 million. The fund said it will retain a controlling stake in the airport.

Gatwick was sold by Spanish group Ferrovial late last year to GIP for £1.51 billion (€1.79 billion; $2.2 billion). That price was a discount from its £1.8 billion RAB and a far cry from the £3 billion analysts said it could have fetched before air travel took a turn for the worse.