Investors flock to support Auckland Airport fund raising

Auckland Airport is well on the way towards raising $1.2 billion as it seeks to shore up its balance sheet to absorb the financial shock incurred by the Covid-19 pandemic. Photo / NZ Herald

Institutional investors have flocked in to support Auckland Airport's $1.2 billion capital raising, fund managers said.

One fund manager, who requested anonymity, said interest was such that the placement "could have have been done on Sunday".

"It's been massive. It's been a global response," he said.

"There will be a degree of scaling, so not everybody will get what they bid for by a consideralbe amount," he said.

The company's shares are in a trading halt on the NZX.

Trading is due to re-start once the capital raising is complete, or by tomorrow morning.

The placement was fully underwritten and was conducted under an auction-style international "book-build" where institutions put in bids.

Auckland Aiport said the fundraising would reinforce its balance sheet to ensure that it remained well capitalised during the period of strict border controls and significantly reduced passenger numbers arising from the Covid-19 pandemic.

The placement is expected to raise $1 billion, with $200 million is expected to come from share purchase plan (SPP).

Under the SPP, individual shareholders will be able to subscribe for up to $50,000 worth of new shares.

The company said the funds raised are expected to be sufficient to meet all operating, investing and financing cash flow obligations.

The placement was underwritten at a floor price of $4.50 per share, representing a discount of 10.7 per cent to the last closing price of $5.04 per share on Friday.

Auckland Council, which owns almost 22 per cent of the airport, said yesterday it only learnt of the proposal on Monday so it was too soon to say if it would participate in the fundraising.

Wade Gardiner, an analyst at Craigs Investment Partners, has adjusted his forecasts for a scenario where borders remain closed for 12 months (compared to six months previously), followed by a slower passenger recovery.

After factoring in revised passenger estimates, rent relief on both its property portfolio and retail concessions Gardiner's revised FY21 Ebitda for the airport falls from $310m to $73m.

With funding risk now off the table the analyst has revised his target price to $5.33 (from $4.70), and retained a "Hold" recommendation.