City airport sale nets £750m
City Airport is to fall into the hands of American and Swiss investors for £750m, netting huge windfalls for Irish tycoon Dermot Desmond.
In the the latest takeover of a London airport - Spanish raiders took over Heathrow, Gatwick and Stansted this summer, and Luton fell two years ago - City Airport is to be acquired by the investment arms of US insurer AIG, America's giant General Electric and Credit Suisse bank.
The acquisition of what is reckoned to be a key strategic asset for the capital's financial districts of Canary Wharf and the City of London, as well as playing a major role in the nearby 2012 Olympics, represents an extraordinary return for Desmond.
With its future under question and its then owner, construction group John Mowlem, in financial troubles, Desmond acquired City Airport a decade ago for just £23m. He recapitalised the business shortly afterwards in a £95m deal with his long-time adviser, US investment bank Morgan Stanley.
The relatively inaccessible City Airport was last year transformed by its long-awaited connection to the Docklands Light Railway. With a short runway in the middle of urban east London, capacity is constrained with the largest jetliners using the runway no bigger than 100-seaters.
The airport, under former Manchester Airport boss Richard Gooding, has never had pretensions of attract ing the high-volume, package-holidays market, concentrating instead on short business hops around the British Isles and to the Continent, and servicing the business-jet market.
With City Airport becoming a viable alternative to Heathrow for many bankers and businessmen, the Docklands terminal has been growing by as much as 20% a year. Gooding has set a target of quadrupling the airport's passenger numbers from the current twom into the next decade.
AIG, which this year took over the shirt sponsorship of Manchester United, was caught up in a major accounting scandal last year. It was fined almost £1bn, and founder lost his Hank Greenberg his job.
Easily a sterling billionaire, Desmond has a wide range of investment interests and is reckoned to be one of Ireland's five richest people. The biggest shareholder in Celtic Football Club, he made a big profit during the Manchester United takeover battle by investing in shares when his horse-racing and golf buddies the bloodstock tycoons John Magnier and JP McManus built up a blocking stake, forcing the American Glazer family to raise their bid to £800m.
A tax exile in Gibraltar, Desmond is a co-owner of the Sandy Lane hotel complex in Barbados and has holdings in Irish and Canadian commodities, natural resources and technology companies. The bidders beat a host of other consortiums, whose members included Balfour Beatty, Frankfurt Airport, Vancouver Airport and Spanish construction group Sacyr.
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