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Business Deals

Paris airport operator to bid in Hokkaido privatization

ADP International CEO says Vietnam investment derailed by local IPO

Sapporo's New Chitose Airport is Japan's fifth-busiest airfield and the primary international gateway to the northern main island of Hokkaido.

HONG KONG -- France's Groupe ADP plans to bid for the right to operate the international airport serving Sapporo, Japan and is in talks to assemble a consortium for this purpose.

The Japanese government plans to privatize the airport, in a package with six others on the northern main island of Hokkaido. New Chitose Airport is Japan's fifth-busiest airfield and the primary international gateway to Hokkaido.

Antonin Beurrier, chief executive of ADP International, the company's overseas unit, said in a briefing in Hong Kong that his company is in talks with Japanese trading houses, property developers and local Hokkaido companies to put together a group for a submission in a preliminary bidding round to be held over the next few months. "You need to find the right chemistry," he said.

ADP manages 26 airports in 15 countries, including three in Paris. It does not currently manage any in Asia, but was previously a strategic shareholder in Beijing Capital International Airport and had a large stake in the operator of Cambodia's three major airports.

ADP officials say the company could use its links with tour operators to bring more traffic to New Chitose.   © Reuters

Hokkaido Airport Terminal Co., which now operates the terminals at New Chitose, has formed a consortium to bid in the privatization with the Development Bank of Japan, Mitsubishi Estate and railway operator Tokyu.

In its bid, ADP plans to emphasize its links with global tour operators who could bring in more traffic to Hokkaido. Beurrier also highlighted the company's experience in balancing civil and military aviation needs, which he said could unlock additional flight capacity at New Chitose. The airport sits next to the Japan Air Self-Defense Force's main base for northern Japan.

The seven Hokkaido airports, two of which are owned by local governments, would move under the winning bidder's management in phases between 2020 and 2021, starting with New Chitose around June 2020. Bidding guidelines are scheduled to be released in April, according to an announcement last month by the Ministry of Land, Infrastructure, Transport and Tourism. The concession would run for 30 years.

French infrastructure company Vinci, a shareholder in ADP, took over management of Osaka's two international airports in 2016 through a consortium with Japanese financial services company Orix, with rights to operate them for 44 years. The consortium expanded its reach to nearby Kobe Airport last year. The partners are reportedly preparing their own bid for the Hokkaido airports.

The French government controls a majority stake in ADP, but officials are reportedly finalizing plans to sell down the holding.

ADP signed a preliminary agreement a year ago to take a 20% stake in Airports Corp. of Vietnam, a state-owned company which operates that country's seven international airfields as well as 15 domestic ones. The deal however was never completed.

In late 2015, ACV had held an initial public offering of 3% of its share capital on Vietnam's Unlisted Public Company Market, a launch platform for the privatization of state enterprises. The share price more than tripled on expectations of ADP's purchase to what Buerrier called a "casino valuation." ADP balked at the new price level and government officials politically could not offer the company a significant discount. "We decided not to continue," Beurrier said.

Shares in the company that operates Hanoi’s Noi Bai and other Vietnamese airports have soared since a late 2015 IPO.   © Reuters

"We are not giving up on our strategy to invest in Vietnam," he added, noting the company's long history of projects in the country. "We will find ways to invest," he said, suggesting the possibility of stakes in specific projects or assets.

Julien Coffinier, Groupe ADP's Asia-Pacific managing director, said the company is also monitoring possible opportunities to invest in airports in India; Medan, Lombok and Batam, Indonesia; and Manila and Clark International in the Philippines.

Philippine news media last year reported that ADP had dropped out of a government auction involving Davao airport and four smaller airfields in which it had partnered with Metro Pacific Investments. Coffinier however said that the bid ended because the Philippine government aborted the privatization. "Today Groupe ADP is only monitoring the situation in case a new process is launched in the future," he said.

ADP Ingenierie, which offers design and other services to airport clients, is moving staff from Paris and Dubai to Hong Kong to expand its team of 10 engineers and architects, according to Gratien Marie, director general of the business. The unit has current contracts for design, project management or engineering studies for airports in Taipei; Kathmandu; Ho Chi Minh City; Bangkok; Yogyakarta, Indonesia; Busan, South Korea; and Beijing and Chengdu, China.

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