Changi Airports International Pte, the overseas investment unit of Singapore's main airport operator, plans to buy stakes in as many as 15 airfields, about half in China, Chief Executive Officer Chow Kok Fong said.
The company aims to manage US$700 million of airport assets in the next three years, Chow, 55, said in Singapore, Bloomberg News reported. Overseas revenue may climb to as much as 20 percent of sales in five years from less than five percent now.
Chow wants to tap growth in the Middle East, China and India, where governments are upgrading airports as rising incomes enable more people to fly. Global passenger air traffic may jump 29 percent by 2011, threatening to overwhelm airports, according to an October forecast by the International Air Transport Association.
"Travel numbers are going to keep growing," said Michael Birch, who oversees about US$140 million at Wallace Funds Management in Sydney. "In countries where there is only one airport, it makes sense to buy such assets because it's a monopoly."
Changi Airports was set up as Changi Airport Managers and Partners (Singapore) Pte in 2004 by the Civil Aviation Authority of Singapore, and renamed two years later.
The company secured its first direct investment in China last month, acquiring a 29 percent stake in the Nanjing Lukou International Airport for US$138 million.
Funding for future purchases will mainly come from its parent, Chow said. The Civil Aviation Authority had net income of S$415 million (US$289 million) for the year ended March 2007, compared with S$448 million the year before.
"We are looking at several deals, which we hope will crystallize over the next three years," Chow said. "A lot of the growth that we expect in China will come from the central and western region. So, we will be spending a lot of our efforts in that region."
Airports are benefiting from deregulation and a surge in travel as budget airlines lure more tourists.
The sheikdom of Dubai, in the United Arab Emirates, has earmarked US$82 billion to create a transport hub for the Persian Gulf. India is selling stakes in its biggest airfields to help pay for US$10 billion in investments over seven years to support travel growth in the world's second-most populous country.
Changi Airports shifted its focus in 2006 to investing overseas, as opposed to just offering consulting and advisory services. The company may consider setting up a trust for its assets, Chow said.
State-controlled Singapore companies including Temasek Holdings Pte and Singapore Telecommunications Ltd have increased their overseas investments in recent years to boost returns and reduce their reliance on the city state.
(Shanghai Daily January 4, 2008)
