December 12, 2012 / 12:40 PM / in 5 years

UPDATE 1-Field of bidders for Portugal airport operator narrows

FRANKFURT/PARIS, Dec 12 (Reuters) - The field of bidders for Portugal’s airport operator ANA is narrowing in the run-up to a Friday deadline for binding offers, three people close to the transaction said.

Lisbon is betting on infrastructure deals to cut its debt, which it must do as a condition of its 78 billion euro ($101.4 billion) international bailout, as demand for regulated assets in Europe remains strong despite the region’s debt crisis.

It has so far sold stakes in power companies EDP and REN, mainly to Chinese investors.

Sources familiar with the matter said groups led by German airport operator Fraport, French construction firm Vinci, Zurich airport operator Flughafen Zurich and Argentinian infrastructure group Corporacion America would hand in final bids.

“We’ve got four very strong bidders fighting each other ahead of Friday. It’s going to be good,” one source said.

“It is expected that (the consortium led by Colombian construction company) Odinsa is the only one not to make a final bid,” another source said.

The offers are expected to be over 2.5 billion euros ($3.25 billion) in a competitive race for access to a network of airports, including those serving the largest cities of Lisbon and Porto, as well as in the southern regions Algarve and Alentejo and in the Azores archipelago.

Vinci - known for its low-ball approach in other auctions - made a very generous indicative bid, said a source familiar with the auction but without direct knowledge of the company’s further plans.

“It seems they have gone overboard in the first round. I don’t know if they can justify that price to shareholders,” the person said.

Vinci has made no secret of its eagerness to build its fledgling airport concessions business. It is trying to rebound from the loss earlier this year of a bidding contest for Turkish airports operator TAV Havalimanlari Holding as well as a decision by Germany’s Hochtief to suspend a planned sale of its airports business.

The Flughafen Zurich bid, meanwhile, could be strengthened by the financial firepower of its partners, Global Infrastructure Partners - owner of Gatwick, Edinburgh and London City airports - and Brazilian motorway operator CCR, the second source said.

ANA posted record profit last year of 76.5 million euros and revenue of 425 million, despite the country’s economic crisis, as the number of foreign visitors rose.

More than three fifths of revenue comes from domestic and intra-European flights and Portugal hopes the potential for growth in long-haul flights to South America and Africa, which could generate high fees for ANA, will appeal to investors.

Potential buyers also see prospects of increasing profits by running ANA more efficiently and developing non-aviation revenue such as from duty free sales and parking fees, people close to the transaction said.

A spokeswoman for Flughafen Zurich said its consortium would hand in a final bid by this week’s deadline.

The Portuguese government and Fraport declined to comment, while Corporacion America, Odinsa and Vinci were not immediately available for comment.

$1 = 0.7693 euros Reporting by Arno Schuetze, Christian Plumb and Sophie Sassard; Additional reporting by Sergio Goncalves and Elena Berton; Editing by Helen Massy-Beresford

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