Macquarie Airports (MAp) is cutting its ties with its parent, the Macquarie Group, to boost its value and have better control over its strategic direction.
"We have examined a range of options to address the gap between the MAp security price and the value of MAp's airports," said Trevor Gerber, chairman of Independent Board Committee for Macquarie Airports, in a MAp stock exchange filing. "We are confident that internalising management is an important further step towards reducing that gap and growing value for all security holders."
MAp's main asset is Sydney Airport, Australia's main gateway, in which it has a 74% stake. It also owns shares in and operates airports in Copenhagen, Brussels and Bristol. It will ask its shareholders to approve the decision and a change of name at a general meeting in September.
The decision comes after the Macquarie Group, Australia's largest investment bank, decided earlier this year that its future was in moving away from publicly listed funds like MAp that had fuelled its growth for several years. Its CEO Nicholas Moore said that there remained "significant upside" in MAp's value, given its "outstanding portfolio of airport assets and strong management team".
His company will receive 150 million new MAp shares at A$2.30 ($1.88) each in compensation for the termination of its management rights, increasing its stake to 27.3%, says the airports operator.
However, it will no longer get management fees that amounted to A$44.1 million in base performance fees annually in the six and a half years to 30 June, and A$255.5 million in performance fees in the same period.
"With the elimination of management fees partially offset by the additional cost of internal management, the earnings of MAp are expected to increase sufficiently to broadly maintain initial earnings per stapled security on the increased capital following the issue to Macquarie," Macquarie Airports said.
The bank will continue to provide support services to MAp for 12 months to allow the airport operator to operate as a standalone entity as soon as possible. The management team, who are now the bank's employees, will be offered employment with MAp and most are expected to accept. Kerrie Mather, MAp's CEO, will continue in that role and has been invited to join the new board.
"MAp's management team remains enthusiastic about the business. As a result of actions taken over the last couple of years, MAp is in a sound financial position," says Mather. "We have high quality airports with good growth prospects and a strong management team that is well placed to extract full value for security holders."
Source: Air Transport Intelligence news
