Winner: Lima Airport Expansion
It took nearly two decades to get going, but construction is now well underway on the expansion of Lima’s international airport.
Since 2001, the Jorge Chávez International Airport in Peru’s capital city has been run by Frankfurt Airport Services Worldwide (Fraport). In the years since the airport operator won the tender, Lima’s airport has transformed in size and scope: passenger traffic had skyrocketed to 25.4 million by the end of 2019, a record number prior to the pandemic, up from just 4.1million passengers in 2001.
Fraport has added 40 new slips for planes, installed 19 boarding bridges – there were none in 2001 – and doubled the number of counters for immigration control. It built food and retail courts where there were none.
Investment was $675 million in the first 20 years, but it is poised to jump substantially through 2025: Fraport, through its Lima Airport Partners division, has initiated a $1.2 billion project that includes a second runway and a new control tower and terminal. Its $450 million loan that closed in late 2020 won it the Airport Financing of the Year award.
The new project will be completed in two stages, with the second runway and control tower completed in 2022 and the new passenger terminal in 2025.
A group of four international banks – BBVA, KfW IPEX-Bank, Scotiabank and SMBC – were mandated lead arrangers on the loan, with SMBC also acting as financial advisor.
While long in the making, the non-recourse financing of the initial phase of the airport expansion came at one of the most critical moments for the project — in the middle of a global pandemic that had severely disrupted air traffic. The airport had essentially shuttered for several months in 2020 as a result of Peru’s strict pandemic lockdown. Passenger traffic in 2020 was 7.6 million, roughly the same as 2007. While it is finally rebounding, with 960,000 passengers in July 2021, compared to just 83,300 a year ago, numbers are still far from the 2.3 million in July 2019, according to data from Peru’s Trade and Tourism Ministry.
When the deal closed, Matthias Zieschang, Fraport CFO, noted its significance for the group. “The transaction underscores the strong interest and demand from capital markets for financing well-managed airports that have a long-term and positive perspective – such as Lima Airport Partners with its major South American hub airport,” he said.
Lima Airport Partners (Frankfurt Airport Services Worldwide – Fraport)
Mandated Lead Arrangers: Scotiabank, BBVA, KfW, SMBC (Financial Advisor)
Milbank, Garrigues (Peru), Paul Hastings, Rodrigo, Elias & Medrano
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