State sell-off fund TAIPED had two reasons to be happy on Thursday, as it looks set to secure the extension of the concession contract for Athens International Airport and to complete the deal for the concession of a plot at Cassiope, in the northern part of Corfu island, after almost four years of delays.
The 20-year extension of the AIA contract, over which comments are currently being exchanged, will set the airport’s administrators back 1.75 billion euros, bolstering the revenues of the sell-off program. The down payment will amount to 580 million euros and the remainder will be broken down into annual payments as a return for airport profits. The annual payment will be calculated as a rate (not yet undetermined) on the pretax earnings.
Although these figures are nominal prices, they are still a far cry from what had been discussed between TAIPED and Hochtief back in 2011 and 2012. At the time the fund pushed hard to obtain 220 million euros for the 20-year extension, but the German firm would not offer any more than 180 million. This is far below the current deal, even if the comparison is at nominal prices.
There are two reasons for that, which concern changes during the last five years. The first is the change in the main stakeholder in the airport’s operator, with the arrival of Canadian investment fund PSP, which altered AIA’s business prospects, as Hochtief had planned to divest from the Athens airport. PSP is interested in a long-term presence and is happy with lower returns.
The second factor concerns the airport’s prospects, as its flight numbers had been in decline in 2011, while nowadays they are taking off. Passengers numbered 15 million in 2011, while five years on they are around 20 million.
As for the project on Corfu, it was January 2013 when TAIPED announced the selection of NCH Capital at the tender for the concession of the Cassiope plot, saying it was “the first direct 100 percent international investment in public land in the last 15 years.” But it was only yesterday that the fund actually completed the privatization project with the signing of the contract and the payment of the first installment of the price.
It therefore took just under four years, not for the works to start and finish, but for the investor and TAIPED to get the necessary approvals, signatures, ministerial decisions and licenses and complete the procedures, as well as deal with the reactions of and court cases brought by various local and other entities.
NCH has in fact waited for almost five years as the original invitation of expressions of interest was back in March 2012. Since then there have been five prime ministers and six governments, and many observers are amazed at the investor’s resilience over this record waiting time. On Thursday it paid 10 million euros while the total price for leasing the 438,000-square-meter plot for 99 years is 23 million euros, plus another 75 million required for the plot’s development.