FERROVIAL YESTERDAY sold London’s second-largest airport for £1.5 billion (€1.65 billion), as much as 25 per cent less than it had suggested Gatwick would fetch when it went up for sale just over a year ago.

Global Infrastructure Partners, the fund backed by Credit Suisse and General Electric which has bought Gatwick, has promised to upgrade services at the airport.

Ferrovial led a consortium which paid £10.3 billion, excluding debt, for airports operator BAA, which owned Gatwick, at the peak of the credit bubble in June 2006. The Spanish infrastructure group said in a regulatory filing that it would take a €142 million charge to its accounts linked to the sale.

This would account for the difference between the sale price and the book value at the end of June, based on the value of the airport’s assets. Ferrovial and its partners – the Singapore government’s investment arm and Quebec’s state pension fund – wanted between £1.8 billion and £2 billion when they opened the bidding process in September 2008.

Already under pressure from the UK’s Competition Commission to break up BAA, Ferrovial had hoped to put the disposal of its most important asset after London’s Heathrow Airport in motion before being formally obliged to sell it and two other airports.

An early sale would also help it to pay down the huge debt mound built up as part of the acquisition of BAA. About two-thirds of Ferrovial’s net debt of €23.3 billion is accounted for by BAA.

However, potential bidders for Gatwick found it difficult to arrange financing, and the auction coincided with dramatic drops in business volume at airports. Tentative offers for Gatwick came in as low as £1.2 billion. – (Copyright The Financial Times Limited 2009)