A good time for MAHB to capitalise on Turkish airport

Disposal to a strong Turkish investor may mitigate local risks and backlash against foreign investments


Malaysia Airports Holdings Bhd’s (MAHB) proposed stake sale in Turkey’s Istanbul Sabiha Gokcen International Airport (SGI) could allow the airport operator to capitalise on its investment.

But one of the world’s largest airport operators would find the stake sale a challenge, especially with the looming financial crisis in Turkey.

Sunway University’s Business School economics professor Dr Yeah Kim Leng said given the uncertainties facing Turkey’s economy, MAHB could be looking to reduce its exposure and realise gains from the SGI stake sale.

“It could also be monetising the mature assets and looking at other investment opportunities to achieve higher returns on investment,” he told The Malaysian Reserve.

Bloomberg reported that Turkish Airlines is bidding to buy a majority stake in SGI from MAHB. Turk Hava Yollari AO, as the company is formally known, could acquire as much as 80% stake in the country’s second airport.

Turkish Airlines is said to offer €750 million (RM3.5 billion) for the stake, Bloomberg cited sources as saying.

MAHB had said before it was considering cutting its stake in SGI, but it did not mention whether the airport operator was willing to part company with a majority stake.

Yeah said the disposal to a strong Turkish investor would mitigate local risks and backlash against foreign investments. “A strong local partner will also enable the joint venture to garner government support should the need arises.”

Economist Prof Dr Barjoyai Bardai said this could turn out to be the best time to sell as the Turkish currency is currently at its lowest, while price of assets in Turkey are relatively cheap to foreign investors due to the currency meltdown.

But he said such sales could be made complicated due to the current situation.

“It may be quite a challenge to find a potential buyer. At the same time, how much MAHB is willing to sell its stake in SGI will depend on the book and market values.

“Looking at all the factors, it may actually attract local (Turkish) investors because of the fall of the Turkish lira,” he said, adding that Turkish Airlines would be a strong candidate for such deal.

The lira has hit a new record low against the greenback, the worst level since the country’s financial crisis in 2001.

SGI is one of the two international airports serving Istanbul, the largest city in Turkey.

In 2007, MAHB was part of a consortium that won a €1.9 billion contract to operate the airport. Six years later, MAHB raised its holding in the airport to 60% by acquiring a 40% stake, which was held by Indian partner GMR Infrastructure Ltd, for €225 million.

In 2014, MAHB bought out the remaining 40% from Turkey’s Limak Holding AS for €285 million and become the sole stakeholder of SGI.

MAHB’s share price dropped 12 sen to close at RM9.74 yesterday.