HNA, Teachers' Said to Lead Bidding for London City Airport

  • Central London airport could fetch more than 2 billion pounds
  • PSP consortium said to quit auction, CKI still interested

London City Airport.

Photographer: Chris Ratcliffe/Bloomberg

China’s HNA Group and a consortium led by Ontario Teachers’ Pension Plan Board and Borealis Infrastructure are in the lead to buy London City Airport from its U.S. owners, people familiar with the matter said.

The central London airport, owned by Global Infrastructure Partners, could fetch more than 2 billion pounds ($2.8 billion), the people said, asking not to be named because the talks are private. The companies have been asked to submit another round of bids Wednesday, and GIP hasn’t chosen a winner, two of the people said. Cheung Kong Infrastructure Holdings Ltd. is also still interested in bidding, they said.

The airport, located about 6 miles (10 kilometers) from London’s financial district and opened in 1987, was acquired by American International Group Inc. and GIP in 2006. At the time, news reports said that the companies agreed to pay 750 million pounds, though terms weren’t disclosed. Two years later, American International sold its stake to GIP and Highstar Capital, which now owns 25 percent.

Any deal would add to the $22.7 billion of airport-related acquisitions over the past 12 months, according to data compiled by Bloomberg. Spokesmen for GIP, PSP and Borealis declined to comment. Representatives for Ontario Teachers’ and CKI didn’t immediately respond to requests for comment, while a media representative for HNA said she couldn’t immediately comment.

The winning bidder will have to come to terms with a political conflict that stands in the way of a planned expansion that would help City serve 6.5 million passengers a year by 2023. London Mayor Boris Johnson vetoed the 250 million-pound plan to add aircraft stands, an arrivals terminal and taxiway last year.

Flights from City carried 3.6 million passengers in 2014, according to the operation’s annual report. That was a 7.9 percent increase from the year before.

HNA Group, which controls China’s fourth-largest carrier, last month bought a stake in Uber China Ltd. and completed its acquisition of aircraft lessor Avolon Holdings Ltd. for $7.6 billion including debt, according to data compiled by Bloomberg. Last week, its shipping affiliate announced a $6.1 billion takeover offer for California-based software distributor Ingram Micro Inc.

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