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A Khazanah spokesman said: “We are looking for a partner with a strong track record of value creation and one that can go beyond what the current airport managers are doing and achieve… GIP fits that bill and like most private equity funds, they will eventually exit after creating value, just as they have done with other airports.”
GIP does have important credentials.
GIP is one of the world’s leading infrastructure managers with a 17-year track record and currently manages $112 billion in assets. In addition to managing ports and airports, GIP has extensive investments in renewable energy and oil and gas projects around the world.
But critics of the privatisation plan point out that GIP-managed airports do not rank highly in international rankings such as Skytrax.
London Gatwick Airport, in which the fund holds a 49.99% stake, ranked 48th in Skytrax’s 2024 rankings, while Sydney Airport, in which GIP holds a 37% stake, ranked 55th In contrast, Singapore Changi Airport ranked secondSouth Korea’s Incheon Airport ranks third, second only to Doha Airport.
Unlike the independent airports currently managed by GIP, MAHB has 39 airports under its umbrella, all of which are located in Malaysia except Istanbul’s Sabiha Gökçen International Airport.
Upgrading requires financial resources
Malaysia’s airports need upgrading.
Kuala Lumpur International Airport (KLIA) is widely seen as a valuable asset for Malaysia Airports, but it ranks 71st in Skytrax’s 2024 airport rankings. In 2019, the airport suffered an embarrassing technical glitch that left passengers stranded, and in 2023, airport management was forced to suspend its aging skytrain network, which is currently being replaced.
Supporters of the privatisation plan point out that the global investment plan will provide much-needed funds and technical expertise to get Malaysia Airports back on track and compete with other international competitors.
Government officials said steps taken by Anwar’s government in March to replace the previous 25-year concession and land lease agreements with new 45-year terms, which expire in 2069, would also allow for better financial planning and airport expansion plans.
But there are concerns that BlackRock’s involvement could cause other troubles, particularly for the future prospects of Istanbul’s Sabiha Gökçen Airport.
Türkiye Turkish President Recep Tayyip Erdogan has said the Israeli offensive on Gaza is “a worsening humanitarian tragedy” and Turkey last month suspended all trade with Israel.
Some bankers speculate that unless relations between the two countries return to normal, Malaysia Airports Holdings Bhd could be put in an awkward position when the concession for Sabiha Gokcen Airport expires in 2023.
CGS International said in a note to clients in late February that Malaysia Airports could choose to bring in a new Turkish investor as a partner in Sabiha Gokcen, in which MAHB currently owns 100%, to increase its chances of extension.
Khazanah declined to comment on Istanbul Airport’s prospects.
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