Corp. America Weighs Brazil Airports, Plans Florence Runway

(Bloomberg) -- Fresh from selling a 25 percent stake in its Italian operations, Corporacion America Airports SA said it may bid on new airport projects in Brazil and plans to start construction on a new runway in Florence. Shares gained the most in two months.

The expansion at the Florence airport will allow larger planes to land in one of the country’s prime tourist destinations, Chief Executive Officer Martin Eurnekian said in an interview. On Friday, construction will start on an extension of the Pisa airport terminal, he said.

Buenos Aires-based Corp. America sold a quarter of its stake in its Italian company to Investment Corp. of Dubai and formed an alliance to explore additional opportunities with the sovereign wealth fund on Wednesday. ICD paid EUR48.9 million ($56.9) for its stake. Shares in Corp. America rose as much as 10 percent to $11.69 per share on Thursday.

The partnership will enable Corp. America, the world’s largest operator of airports based on the number of hubs under management, to expand its reach as air travel surges worldwide. The company has been building its investment in Toscana Aeroporti in recent months.

‘Grow Together’

“We have a long-term arrangement with them where they’re looking to grow in infrastructure and they saw in us a company with a size and agility with which they want to find a way of generating new projects,” Eurnekian said of the partnership. “We want to grow together and this is also a recognition by them of our capacity to execute airport projects.”

The search for new airport investments will be focused on Italy, the Middle East and Eastern Europe, the companies said in a statement. The Italian deal involves a stake in Corporacion America Italia, the majority stakeholder in Toscana Aeroporti, which owns the rights to operate Florence and Pisa airports.

Financing for the Pisa and Florence projects had been raised before the deal with ICD. The Pisa expansion will increase its surface area by 50 percent, Eurnekian, who last year inherited the day-to-day running of the company’s airport business from his billionaire uncle Eduardo Eurnekian, said.

There are no plans for ICD to participate in Latin America for now, Eurnekian said, but he didn’t rule it out in the future. The company is considering bidding for new concessions in Brazil, he said.

While Corporacion America is focused on developing its current assets, Eurnekian said the company will also look at investment opportunities in Central America and the Caribbean and in the U.S.

‘Add Value’

“We always look for places that have the capacity to add lots of value,” Eurnekian said. “We’re not the kind of player that will buy an airport in the secondary market that’s already well managed and well structured because those are normally cost of capital plays.”

Corporacion America raised $486 million in its initial public offering as it sought to set itself up for expansion after transitioning from a family-owned operation. The sale raised less than the company’s original goal after investors expressed concern about risks associated with some of its airport contracts. Shares are down about 33 percent since then.

Investment Corp. of Dubai, the Dubai government’s principal investment arm, has a portfolio that includes stakes in companies such as Emirates Airline and Dubai Airport Free Zone. The fund generated net profit of 24.6 billion dirham ($6.7 billion) in 2017.

Corporacion America operates 52 airports and cargo terminals worldwide. The core of the business, which generated revenue of $1.6 billion in 2017, is in Argentina, where local unit Aeropuertos Argentina 2000 controls 36 airports with a contract until 2028.

To contact the reporters on this story: Charlie Devereux in Madrid at cdevereux3@bloomberg.net;Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Susan Warren, Brendan Case

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