Khazanah Nasional Bhd, the Employees Provident Fund (EPF) and New York-headquartered private equity (PE) firm Global Infrastructure Partners (GIP) are understood to be forming a consortium to own and operate Malaysia Airports Holdings Bhd, according to a press report. An agreement could be signed in two to three weeks with equity participation on the part of GIP.
Khazanah is currently the largest shareholder of MAHB with a 32.67% stake, while EPF has 7.06% equity interest in the airport operator. MAHB manages a total of 39 airports across Malaysia and wholly owns and manages Istanbul Sabiha Gokcen International Airport in Turkey. It also has an 11% stake in Rajiv Gandhi International Airport in Hyderabad, Telangana, India.
Source: https://en.wikipedia.org
GIP, the PE firm is in the midst of being taken over by BlackRock in a US$12.5 billion (RM59.8 billion) cash and share deal. The acquisition is slated for completion by the third quarter of this year. GIP, which was founded in 2006, has US$60 billion in assets under management in diverse parts of the world, including ports, liquefied natural gas and container terminals, renewable energy assets, water treatment plants, rail transport assets and ammonia-urea plants, among others. GIP is well known for running airports. MAHB has been having issues with the Kuala Lumpur International Airport, its main asset, problems with the aerotrain, and ageing baggage handling systems and others.
The PE firm has under its belt Sydney Airport in Australia, two airports in London — Gatwick and London City — and Edinburgh Airport in Scotland. Gatwick is one of the largest airports in Europe and serves more than 46 million passengers a year, while Sydney Airport is Australia’s largest airport and primary international gateway serving over 44 million passengers. Edinburgh Airport is Scotland’s busiest airport, serving more than 14 million passengers. From January to September 2023, MAHB’s airports saw 60.7 million passengers, while its Turkish operations at Istanbul Sabiha Gokcen International Airport catered to 28.1 million passengers. On the local front, MAHB’s passenger traffic significantly came from its largest airports — KLIA (which has two terminals, one of which is a low-cost facility), Kota Kinabalu International Airport, Kuching International Airport, Langkawi International Airport and Penang International Airport.
For the nine months ended Sept 30, 2023, MAHB chalked up a net profit of RM255.47 million on the back of RM3.54 billion in revenue. In the previous corresponding period, the airport operator suffered a net loss of RM171.94 million from RM2.12 billion in revenue.
MAHB’s net cash generated from operating activities during the nine-month period was RM1 billion. It had cash and cash equivalents of RM1.64 billion as at end-September 2023. On the other side of the balance sheet, it had long-term debt commitments of RM4.07 billion and current liabilities of RM640.6 million. Its finance costs for the nine-month period stood at RM500.35 million, even though it had almost RM1.4 billion in retained earnings.
While its financials have picked up, MAHB has been in the spotlight because of the breakdown in March 2023 of its aerotrain that connects the main building to the satellite terminal, leading to much passenger discomfort and inconvenience.
MAHB had awarded a RM742.95 million contract to Pestech International Bhd and its partner Alstom Transport Systems (Malaysia) Sdn Bhd for the design, supply, installation, testing and commissioning of an automated people mover and associated works at KLIA, including financing, operation and maintenance. The contract was to run until Feb 11, 2034.
However, MAHB terminated Pestech’s contract in mid-August 2023, citing issues of non-performance and delay risks to delivering the project by the deadline.
In January 2024, Pestech was reappointed as contractor of the aerotrain replacement project with Alstom and construction giant IJM Corp Bhd, which is acquiring a controlling block of 44.83% equity interest in Pestech via a share issuance.
The contract awarded to Pestech at end-2021 required the new aerotrains to commence operations by July 2024, but this has been extended to March 2025. Until then, passengers will be ferried to their respective aircraft in buses.
It is time we had better management of our airports, especially KLIA – the gateway for tourists. It certainly leaves a poor impression on visitors if the aerotrain is not functioning. Several reasons could be advanced but it is essentially a case of maintenance and management. Both we seem to lack!
Reference:
Khazanah, EPF and GIP forming consortium to run MAHB, Jose Barrock / theedgemalaysia.com, 4 March 2024
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