New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Auckland Airport<br>Questionable Quid from SYD Bid</h2>
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<p><strong>UNDERPERFORM</strong></p>
<p>A&nbsp;takeover bid by a consortium of infrastructure investors for key peer&nbsp;Sydney Airport (SYD) raises the question as to whether Auckland Airport (AIA) is also a target?&nbsp;We can’t rule out a potential future bid for AIA though there are several key impediments: (1) the Overseas Investment Act (OIA) creates a major hurdle for offshore buyers, as it did for Canadian Pension Plan Investment Board's (CPPIB) partial bid for AIA in 2008, (2) politics will likely interplay with the more subjective aspects of the OIA, in particular the new national interest assessment, and (3) the number of NZ based infrastructure acquirers that could participate in a bid is limited (these include but are not limited to: NZ Super, ACC, and&nbsp;Infratil) given the size of AIA. We retain an UNDERPERFORM rating.&nbsp;</p>
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<h3>National interest assessment hurdle</h3>
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<p>The then relevant ministers (David Parker and Clayton&nbsp;Cosgrove&nbsp;in the Helen Clark led Labour Government)&nbsp;ruled against the CPPIB bid for 40% of AIA in 2008 under the OIA as the proposed investment failed the 'benefit to New Zealand' test.&nbsp;Since then the OIA has been strengthened; it now includes a mandatory 'national interest assessment' for airports.&nbsp; This raises the bar further and lowers the likely success of potential offshore bids for AIA.&nbsp;</p>
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<h3>AIA trades at premium to SYD bid multiple&nbsp;</h3>
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<p>The bid for SYD, which reflects a +42% premium to the previous close, values it on a peak earnings (FY19) EV/EBITDA multiple of ~22.6x. This compares to AIA's current trading multiple of ~22.8x, based on its historic peak earnings (CY19). Moreover, AIA now trades at just a -3% discount to its pre COVID-19 enterprise value (EV). In contrast, the opportunistic nature of the SYD bid is highlighted by it (EV of A$30.2bn) equating to just a +4%&nbsp; premium to its pre COVID-19 EV (A$28.9bn).&nbsp;</p>
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<div><strong>Andy Bowley</strong></div>
<div><a href="mailto:andy.bowley@forsythbarr.co.nz" target="_blank" rel="noopener">andy.bowley@forsythbarr.co.nz</a></div>
<div>+64 4 495 8246</div>
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<div><strong>Matt Noland</strong></div>
<div><a href="mailto:matt.noland@forsythbarr.co.nz" target="_blank" rel="noopener">matt.noland@forsythbarr.co.nz</a></div>
<div>+64 9 368 0134</div>
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Auckland Airport Questionable Quid from SYD Bid

UNDERPERFORM
A&nbsp;takeover bid by a consortium of infrastructure investors for key peer&nbsp;Sydney Airport (SYD) raises the question as to whether Auckland Airport (AIA) is also a target?&nbsp;We can’t rule out a potential future bid for AIA though there are several key impediments: (1) the Overseas Investment Act (OIA) creates a major hurdle for offshore buyers, as it did for Canadian Pension Plan Investment Board's (CPPIB) partial bid for AIA in 2008, (2) politics will likely interplay with the more subjective aspects of the OIA, in particular the new national interest assessment, and (3) the number of NZ based infrastructure acquirers that could participate in a bid is limited (these include but are not limited to: NZ Super, ACC, and&nbsp;Infratil) given the size of AIA. We retain an UNDERPERFORM rating.&nbsp;


National interest assessment hurdle


The then relevant ministers (David Parker and Clayton&nbsp;Cosgrove&nbsp;in the Helen Clark led Labour Government)&nbsp;ruled against the CPPIB bid for 40% of AIA in 2008 under the OIA as the proposed investment failed the 'benefit to New Zealand' test.&nbsp;Since then the OIA has been strengthened; it now includes a mandatory 'national interest assessment' for airports.&nbsp; This raises the bar further and lowers the likely success of potential offshore bids for AIA.&nbsp;


AIA trades at premium to SYD bid multiple&nbsp;


The bid for SYD, which reflects a +42% premium to the previous close, values it on a peak earnings (FY19) EV/EBITDA multiple of ~22.6x. This compares to AIA's current trading multiple of ~22.8x, based on its historic peak earnings (CY19). Moreover, AIA now trades at just a -3% discount to its pre COVID-19 enterprise value (EV). In contrast, the opportunistic nature of the SYD bid is highlighted by it (EV of A$30.2bn) equating to just a +4%&nbsp; premium to its pre COVID-19 EV (A$28.9bn).&nbsp;



Andy Bowley
andy.bowley@forsythbarr.co.nz
+64 4 495 8246





Matt Noland
matt.noland@forsythbarr.co.nz
+64 9 368 0134



オークランド空港：SYD入札の疑わしい代償

Auckland Intl Airport

オークランド空港：SYD入札の疑わしい代償