Turkish Airlines to buy 80pc stake in ISGIA from MAHB

MAHB can use proceeds from sale on local airports’ expansion, say analysts

TURKISH Airlines is bidding for a majority stake in Istanbul’s second airport from Malaysia Airports Holdings Bhd (MAHB), a deal analysts said will raise the much-needed funds for the airport operator’s domestic expansion.

Bloomberg, quoting people with knowledge of the matter, said Turk Hava Yollari AO, as the airline is formally known, could buy 80 per cent of Istanbul Sabiha Gokcen International Airport (ISGIA).

Turkish Airlines is said to have offered €750 million (RM3.5 billion) for the stake.

MAHB was part of a consortium that won a €1.9 billion contract to operate the airport in 2007.

In 2013, it agreed to raise its holding in ISGIA to 60 per cent by acquiring a 40 per cent stake held by Indian partner GMR Infrastructure Ltd for €225 million.

It bought the remaining 40 per cent from Turkey’s Limak Holding in 2014 for €285 million.

Analysts said the possible sale would raise the much-needed funds for MAHB to undertake its long-awaited assets expansion in Malaysia,

Maybank Investment Bank Bhd aviation analyst Mohshin Aziz said MAHB had been trying to dispose of ISGIA.

“If the deal is true, the (purported) price is good as it is a premium over MAHB’s own valuation of earnings before interest, taxes, depreciation, and amortisation,” he told NST Business.

Mohshin said MAHB could gain net proceeds of €366 million from the disposal, based on ISGIA’s net book value of €460 million in MAHB’s 2017 annual report.

“With the proceeds, MAHB can develop infrastructure of its airports in Malaysia, including the main terminal of Kuala Lumpur International Airport, Penang International Airport and Langkawi International Airport,” he added.

Mohshin said there would be zero impact on MAHB if the deal did not materialise, adding that ISGIA was an airport with long-term potential that was seeing year-onyear incremental growth.

Asian transport equity research firm Crucial Perspective chief executive officer Corrine Png said disposing of a majority stake would command a higher valuation, given the control premium.

“Investors are likely to welcome this move as ISGIA has been an earnings drag for MAHB as it has large capital requirements.

“It would be a good opportunity to unlock value through this divestment for MAHB investors,” she said.

MAHB former managing director Datuk Badlisham Ghazali previously said the company was evaluating its strategic partners, citing that the asset was attractive with high valuation and the concession valid until 2034.

He said ISGIA was encouraged by international growth with international travel starting to gain its traction.

“That is attractive proposition for us, travelling passengers and airlines as well as investors,” he reportedly said.