Acsa investor 'to quit'
Aeroporti di Roman (AdR), the Italian-headquartered company that operates airports across the globe, is set to divest its stake in the Airports Company South Africa (Acsa), having seen the value of its stake increase from R1,2-billion to R3-billion since 1998.
Like steel giant Mittal and telecommunications operators Malaysia Telekom and SBC, which were until last year invested in Telkom, AdR is set to profit handsomely from its decision to invest in South Africa.
AdR paid R819-million for a 20% stake in 1998, valuing Acsa, which operates 10 airports in South Africa, at just more than R4-billion. AdR also had the right to acquire a further 10% at the same real price.
This option ran to 2001 when the late transport minister, Dullah Omar, announced that the planned listing of Acsa on the JSE Securities Exchange would be postponed for at least another three years.
The original agreement gave the government a right to initiate the initial public offering (IPO) by April 2001, failing which AdR would have the same right.
“AdR has agreed not to exercise this right, and has further agreed with the South African government to extend the time frame for launching the IPO by a further three years,” Omar told Sapa at the time.
Among the reasons for this decision was that not enough had been done to transform Acsa and its management at all airports to reflect the demographics of the population.
Also not enough had been done regarding opportunities for black economic empowerment within airports and business activities, although some progress had been made.
The right to exercise the 10% option was subsequently further extended to June 30 this year at the same price, meaning that seven years later AdR has the right to acquire the stake at bargain basement 1998 prices even though Acsa has seen considerable increase in its value.
Acsa reported profits of R363-million when the purchase was announced. Its before-tax profits are expected to top R900-million this year, says one Acsa watcher. The 1998 deal had a price-to-earnings ratio of 11. A similar ratio now would value Acsa at close to R10-billion.
AdR appears to be ready to pocket its profit and run. Its 44% shareholder Macquarie, also an international player in the airport industry, in a Macquarie/AdR joint presentation at Rome airport on May 16, described Acsa as non-core and said it would divest its stake.
The presentation indicates that it expects to reflect the sale in its first-quarter results, being April to June this year.
Allowing AdR to delay exercising the 10% option has cost the state hundreds of millions of rands, given Acsa’s dramatic increase in value. The 10% stake was worth R409-million in 1998; it is now estimated at R1-billion.
Assuming AdR exercises its 10% option, it would have bought a 30% stake for R1,2-billion that it can now sell at R3-billion, assuming an unchanged price:earnings ratio.
Acsa’s other investors are the government and an empowerment consortium led by Mashudu Romano, which has a 5,4% stake.
Department of Transport Director General Mpumi Mpofu says AdR’s option was extended because “the shareholders had not finalised the issues that they were still negotiating between themselves relating to their respective interests in Acsa.
“It would not have served any purpose to attach economic value to the extension as government and not AdR was seeking the extension. This would have caused unnecessary financial burden to the government.” Mpofu says Acsa and the government have benefited through the participation of the strategic equity partner in Acsa.
“The fact that, in the event that AdR were to disinvest (which we do not confirm) and get substantial value from their investment, it is a matter that cannot be avoided, as it follows naturally that any investor would dispose their interest at returns that are acceptable to themselves.”
Mpofu says where foreign partners were introduced for state-owned enterprises this was driven by a clear strategy that sought to achieve both financial and technical expertise.
Acsa says its financial results will be released in late August.
AdR did not respond to e-mailed questions.