China's Hangzhou Airport will pick banks next month to help it float shares in Hong Kong or Shanghai in 2009 to bankroll a $1bn-plus, multi-year expansion aimed at riding a travel boom, its operators said.
The country's eighth-busiest airport wants capital to serve an expected surge in demand as increasing numbers of Chinese take to the skies, Raymond Lai, Executive Director of Finance and Investment for the Hong Kong Airport Authority, told Reuters.
Hangzhou's airport - in which the Hong Kong firm owns a 35% stake - will host a "beauty contest" between eight local and foreign investment banks in early July to choose help for it go public, a sources with Hangzhou airport said.
Lai shrugged off suggestions the firm was headed for a bear market: Shanghai's benchmark index and Hong Kong's have shed 44% and 20% of their value, respectively, in 2008 after years of stellar performances.
"We view Hangzhou airport as a long-term, strategic investment," Lai said in an interview. "And from our perspective, we of course would want it to list in Hong Kong."
Hangzhou Xiaoshan International Airport Co plans to build a second runway and terminal for CNY7-8bn ($1-1.17bn), an expansion mirrored at airports across the country.
Sources involved in the airport's capital-raising plans say the firm, which posted a profit of over CNY300m in 2007, is now valued at as much as CNY10bn, based on the valuations of currently listed Chinese peers.
Beijing Capital and Hainan Meilan trade at 33 times and 15.1 times 2009 earnings, respectively.
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Hangzhou's airport handled 11.73 million passengers in 2007, a rise of 18.3% from a year ago, official data show.
Passenger volume at the airport, a gateway to the major tourist destination of Hangzhou and affluent eastern China, is estimated to exceed 13 million this year, executives have said.
Airports around China are building runways, terminals and facilities to cater to growing demand from an increasingly mobile population, as the country's economy grows at 10% a year.
Hangzhou's own airport is aiming to complete the first phase of its expansion by 2011, with final completion slated for 2014. It will be able to handle 26 million passengers annually by the end of its roll-out.
Hong Kong's airport operator has been keen to invest in Chinese aviation infrastructure, buying into Hangzhou's hub in late 2006 for about CNY2bn.
It's considering a similar investment in the airport of neighbouring Shenzhen, though that has not been finalised.
Beijing started opening its aviation infrastructure sector three years ago to foreign and domestic investment as it seeks cash and expertise to propel an industry overhaul, needed to cope with growing passenger traffic.
Since then, the sector has been luring investors from Fraport AG to Singapore's Changi Airport.
"Quite apart from Hangzhou, we're constantly on the lookout for opportunities to invest or cooperate," Lai said.
By Joanne Chiu, Reuters
