WEBVTT 1 00:00:08.665 --> 00:00:10.695 Hello and welcome to this Vidcast 2 00:00:11.225 --> 00:00:13.855 which will give us the opportunity to analyze 3 00:00:13.955 --> 00:00:18.215 and observe the different statuses that an asset can take 4 00:00:18.725 --> 00:00:21.975 private asset versus public asset. 5 00:00:22.635 --> 00:00:26.255 And we are going to use the example of the recent listing 6 00:00:26.595 --> 00:00:30.295 of the International Airport of Athens In Greece 7 00:00:32.595 --> 00:00:35.295 before the listing there was a price range 8 00:00:35.795 --> 00:00:37.175 for the stock price 9 00:00:37.835 --> 00:00:40.495 and the price range was ranging from pessimistic 10 00:00:40.495 --> 00:00:45.295 to optimistic, from seven euros to 8.2 euros per share. 11 00:00:46.275 --> 00:00:50.375 At the end of the day, the price which was decided was 8.2, 12 00:00:51.035 --> 00:00:52.375 the upper side of the range, 13 00:00:52.995 --> 00:00:57.975 and quite quickly the stock price went too high of 9.6 euros 14 00:00:57.975 --> 00:01:01.575 because investors were quite enthusiastic about the offer. 15 00:01:02.745 --> 00:01:05.855 Today, March 13, when I record this with 16 00:01:06.555 --> 00:01:09.335 the stock price is about 8.7 euros. 17 00:01:09.875 --> 00:01:12.655 The market has been quite stable throughout the months 18 00:01:12.995 --> 00:01:15.815 and so at the end of the day it was a right price. 19 00:01:16.825 --> 00:01:18.535 Today market capitalization 20 00:01:18.835 --> 00:01:22.575 of a i A is 2.6 billion euros. 21 00:01:23.115 --> 00:01:27.055 The demand from the investors was 8.6 billion euros, 22 00:01:27.505 --> 00:01:30.175 which gives you an idea about the enthusiasm 23 00:01:30.175 --> 00:01:32.535 of the investors in the listing. 24 00:01:34.155 --> 00:01:36.855 Now a few dates to observe the chronology. 25 00:01:37.795 --> 00:01:39.935 The first date is 2001. 26 00:01:40.485 --> 00:01:42.935 It's the opening of the airport, the integration 27 00:01:42.955 --> 00:01:47.135 of the airport, a left areas vene, which was given 28 00:01:47.515 --> 00:01:48.655 as a name to the airport 29 00:01:48.685 --> 00:01:52.775 because of a very famous political person in Greece. 30 00:01:53.235 --> 00:01:57.215 The first plane which landed in Akins was coming 31 00:01:57.285 --> 00:01:58.295 from Montreal. 32 00:01:59.475 --> 00:02:02.095 The reason why a new airport was built 33 00:02:02.275 --> 00:02:05.895 by Greece is the Olympic Games, which took place 34 00:02:06.475 --> 00:02:07.655 in 2004. 35 00:02:07.865 --> 00:02:11.335 There was an urgent need for a new efficient 36 00:02:11.415 --> 00:02:12.655 and modern airport, 37 00:02:13.955 --> 00:02:17.375 but very often when you build such a very 38 00:02:17.965 --> 00:02:19.375 expensive construction, 39 00:02:19.995 --> 00:02:22.255 you use a public private partnership. 40 00:02:22.955 --> 00:02:24.855 So basically there will be a number 41 00:02:24.855 --> 00:02:27.375 of investors contributing to the construction, 42 00:02:27.395 --> 00:02:31.095 the operations throughout a concession who's going 43 00:02:31.095 --> 00:02:33.855 to be in charge, a very well known German captain, 44 00:02:33.855 --> 00:02:36.415 and in a construction business whose name is tif 45 00:02:37.115 --> 00:02:38.175 and TIF is going 46 00:02:38.175 --> 00:02:41.775 to start running a business about running airports. 47 00:02:42.775 --> 00:02:47.255 TIF F Airport is going to be created in 1997, uh, 48 00:02:47.255 --> 00:02:50.895 taking the opportunity of the airport of Athens. 49 00:02:51.675 --> 00:02:54.655 At the end of the day, you create a special purpose vehicle, 50 00:02:54.975 --> 00:02:57.575 a company which is going to run throughout the concession. 51 00:02:58.595 --> 00:03:03.485 HTI Airport holds 40% of the shares plus 60 shares, 52 00:03:03.485 --> 00:03:06.805 so a little bit more than 40%, which is going 53 00:03:06.805 --> 00:03:07.925 to be absolutely crucial. 54 00:03:08.565 --> 00:03:10.085 I will explain you why in a few minutes. 55 00:03:10.385 --> 00:03:15.125 The Greek state keeps retains 55% of the shares 56 00:03:15.265 --> 00:03:17.245 and then is controlling the airport. 57 00:03:18.485 --> 00:03:21.845 A family known in Greece to be, uh, 58 00:03:21.895 --> 00:03:25.485 quite involved in concession and construction to cop's. 59 00:03:25.485 --> 00:03:30.165 Family is going to hold 5%, a little bit less than 5% 60 00:03:30.165 --> 00:03:34.765 of the shares, so 5% minus 60 shares, so plus 60 61 00:03:35.225 --> 00:03:37.885 for TIF and minus 60 for the family. 62 00:03:38.415 --> 00:03:42.415 Again, it's going to be quite a, as you all know, 63 00:03:42.595 --> 00:03:47.255 in 2009 there will be the explosion of the subprime crisis. 64 00:03:47.435 --> 00:03:48.655 So it's going to be an economic 65 00:03:48.715 --> 00:03:50.535 and financial crisis for the whole planet 66 00:03:51.195 --> 00:03:52.975 and probably more for Greece 67 00:03:52.975 --> 00:03:56.215 because there will be some problems which are going 68 00:03:56.215 --> 00:03:58.015 to be discovered in sovereign debt. 69 00:03:58.955 --> 00:04:02.375 As a consequence, a country is going to take commitments, 70 00:04:02.915 --> 00:04:05.215 is going to create a privatization fund. 71 00:04:05.395 --> 00:04:09.575 You have to sell assets just to be able to reduce the amount 72 00:04:09.575 --> 00:04:12.055 of indebtedness in the country. 73 00:04:13.355 --> 00:04:15.495 The Hellenic Corporation of Assets 74 00:04:15.795 --> 00:04:18.055 and Participation is a financial holding 75 00:04:18.715 --> 00:04:22.735 in which they are most of the assets owned by the state. 76 00:04:23.925 --> 00:04:28.495 HCAP owns 55% of the airport at the very beginning. 77 00:04:28.565 --> 00:04:30.375 This is what I was explaining, 78 00:04:31.115 --> 00:04:35.175 but today the fund owns only 25% 79 00:04:36.175 --> 00:04:37.655 directly in the airport 80 00:04:37.655 --> 00:04:41.775 because 30% of the shares were put in a fund, 81 00:04:41.775 --> 00:04:45.815 which was a dedicated privatization fund whose name is 82 00:04:45.895 --> 00:04:49.375 Hellenic Republic Asset Development Fund. 83 00:04:51.715 --> 00:04:53.175 In parallel, something happens, 84 00:04:53.175 --> 00:04:56.055 which is quite important in Canada, it's a creation 85 00:04:56.055 --> 00:04:57.535 of PSP investment. 86 00:04:58.445 --> 00:05:02.855 It's a Canadian public sector pension investment board. 87 00:05:03.805 --> 00:05:06.695 Basically, this pension fund is in charge of 88 00:05:07.375 --> 00:05:08.775 managing the pension of a number 89 00:05:08.775 --> 00:05:11.455 of people coming from the public sector. 90 00:05:11.835 --> 00:05:13.695 And today as a total assets managed 91 00:05:13.755 --> 00:05:16.495 by the fund are about 250 92 00:05:16.995 --> 00:05:19.655 to 300 billion Canadian dollars. 93 00:05:19.795 --> 00:05:21.815 So it's absolutely not negligible. 94 00:05:21.835 --> 00:05:25.375 In 2030 PSP is acquiring 95 00:05:25.885 --> 00:05:28.775 four teeth airport GA and Beha 96 00:05:28.775 --> 00:05:33.375 because it's a German company, very often this kind 97 00:05:33.375 --> 00:05:35.975 of pension fund is investing in infrastructure 98 00:05:35.975 --> 00:05:38.135 because it's about long term concessions 99 00:05:38.395 --> 00:05:40.815 and reasonably predictable cash flows. 100 00:05:41.755 --> 00:05:45.295 HTI Airport is going to be renamed AVI Alliance 101 00:05:45.995 --> 00:05:48.215 and it's still headquartered in d***o. 102 00:05:48.365 --> 00:05:50.655 It's a German company according to Z Low. 103 00:05:51.435 --> 00:05:56.135 Now the company is running the airport in Athens, Greece, 104 00:05:56.515 --> 00:06:00.965 but also Germany, Hungary, Albania, Australia 105 00:06:01.025 --> 00:06:02.045 and Puerto Rico. 106 00:06:02.265 --> 00:06:05.125 So it's quite diversified infrastructure fund. 107 00:06:05.295 --> 00:06:09.405 Today if we go back to Greece, 108 00:06:09.745 --> 00:06:12.525 of course a country has been hit by the subprime crisis 109 00:06:13.265 --> 00:06:15.565 and the sovereign debt problems. 110 00:06:16.355 --> 00:06:20.405 Financial consolidation is needed prioritizations, 111 00:06:20.905 --> 00:06:23.685 but as far as air transportation is concerned, 112 00:06:24.505 --> 00:06:27.205 the planet was hit by COVID-19. 113 00:06:27.435 --> 00:06:32.165 Traffic went down by 60% in Athens for domestic flights 114 00:06:32.785 --> 00:06:36.485 and about 90% for international flights. 115 00:06:37.025 --> 00:06:40.565 Now the Covid is obviously a bit behind us 116 00:06:41.065 --> 00:06:43.365 and domestic flights are back to normal, 117 00:06:44.065 --> 00:06:47.405 almost international flights, not quite some, 118 00:06:47.865 --> 00:06:50.845 but basically it's getting better and better. 119 00:06:53.665 --> 00:06:56.005 Now there are some other good news as far 120 00:06:56.005 --> 00:06:57.285 as Greece is concerned. 121 00:06:58.065 --> 00:07:00.165 As a consequence of the crisis, the company 122 00:07:00.715 --> 00:07:04.685 sovereign debt was speculative grade BB plus 123 00:07:05.625 --> 00:07:07.405 in October, 2023, standard 124 00:07:07.425 --> 00:07:08.685 and pools decided 125 00:07:08.685 --> 00:07:11.965 to be a little bit more positive about Greece 126 00:07:12.545 --> 00:07:16.485 and move the rating from BB plus to triple B minus, 127 00:07:17.505 --> 00:07:19.205 and this one notch 128 00:07:19.305 --> 00:07:22.005 of transformed the country from speculative 129 00:07:22.025 --> 00:07:25.405 to investment grade feature followed in 130 00:07:25.605 --> 00:07:30.005 December, 2023 from BB plus two, 131 00:07:30.185 --> 00:07:33.565 triple B minus in the country. 132 00:07:33.635 --> 00:07:35.645 Tourism is absolutely fundamental. 133 00:07:35.905 --> 00:07:38.685 It represents 18% of GDP 134 00:07:39.345 --> 00:07:43.765 and it employs 900,000 people, which is about 20% 135 00:07:43.905 --> 00:07:46.325 of the total employed people in Greece. 136 00:07:46.905 --> 00:07:48.805 So that's absolutely phenomenal. 137 00:07:49.025 --> 00:07:51.005 Athens plays a huge role 138 00:07:51.005 --> 00:07:54.805 because it welcomes 35% of foreign visitors 139 00:07:55.425 --> 00:07:58.285 and the extremely good news about the airport is 140 00:07:58.285 --> 00:08:00.925 that it is a real cash machine. 141 00:08:03.575 --> 00:08:05.245 Let's first have a look at the p 142 00:08:05.245 --> 00:08:07.685 and l financial metrics of the airport. 143 00:08:08.505 --> 00:08:11.485 The revenues generated by the airport in 2023 144 00:08:12.105 --> 00:08:15.045 are about 600 million, uh, 145 00:08:15.105 --> 00:08:17.685 by 27% against 2022. 146 00:08:18.145 --> 00:08:22.125 2022 was up by 25% against 2021, 147 00:08:22.625 --> 00:08:24.485 but it is the consequence of the 148 00:08:25.165 --> 00:08:27.685 recovery from Covid increase in the traffic. 149 00:08:28.705 --> 00:08:32.805 Now the EBITDA is absolutely great, 400 million, 150 00:08:32.815 --> 00:08:35.925 which represents 67% to revenues. 151 00:08:36.425 --> 00:08:39.925 It was 69% in 2022, but it's a strong p 152 00:08:39.925 --> 00:08:41.765 and l strong performance as far 153 00:08:41.765 --> 00:08:43.365 as the return on sales is concerned 154 00:08:43.705 --> 00:08:47.165 and it is transforming to a high return on sales as far 155 00:08:47.165 --> 00:08:48.485 as EBIT is concerned, 156 00:08:49.015 --> 00:08:53.325 54% in 20 23, 50 2% in 2022. 157 00:08:53.745 --> 00:08:57.005 So the p and a is quite strong earning earnings per share. 158 00:08:57.025 --> 00:09:00.205 The bottom line is going to show some nice progresses. 159 00:09:00.905 --> 00:09:03.565 The earnings per share in 2023 are earned 160 00:09:03.625 --> 00:09:06.765 by 37% against 2022. 161 00:09:07.395 --> 00:09:11.325 Well, the p and l is strong, but the p and l is not the p 162 00:09:11.325 --> 00:09:13.645 and l is about the return on sales, 163 00:09:13.785 --> 00:09:16.125 but it's not about the financial performance as a company. 164 00:09:16.785 --> 00:09:19.245 The financial performance is represented by the ability 165 00:09:19.265 --> 00:09:21.645 of the company to generate a return on capital, 166 00:09:21.735 --> 00:09:24.845 which is more than the weighted average cost of capital, 167 00:09:25.345 --> 00:09:27.365 the return which is expected by investors 168 00:09:27.665 --> 00:09:29.365 to remunerate risk. 169 00:09:30.465 --> 00:09:32.525 Now you have to calculate the capital employed. 170 00:09:32.585 --> 00:09:35.325 It was 1.1 in 2023 171 00:09:35.665 --> 00:09:38.525 and about 1.4 in 2022. 172 00:09:39.305 --> 00:09:42.205 So there is a kind of asset management in order 173 00:09:42.265 --> 00:09:43.645 to reduce the capital employed. 174 00:09:44.305 --> 00:09:45.885 Now when the capital employee is down 175 00:09:46.065 --> 00:09:48.885 and in the meantime the revenues are up, you understand 176 00:09:48.885 --> 00:09:51.085 that the assets productivity is going 177 00:09:51.085 --> 00:09:53.445 to be very significantly up. 178 00:09:53.905 --> 00:09:55.405 We are going to discuss that in a minute, 179 00:09:56.065 --> 00:09:57.685 but what is also very important 180 00:09:57.745 --> 00:10:00.325 to understand is the evolution of the financial structure 181 00:10:00.345 --> 00:10:04.925 of the financial strategy of the company in 2022, the 1.4 182 00:10:05.105 --> 00:10:07.565 or more or less, 1 billion in equity 183 00:10:07.825 --> 00:10:09.765 and 400 million in debt. 184 00:10:10.555 --> 00:10:14.005 Then the gearing debt over equity is about 0.4. 185 00:10:15.185 --> 00:10:17.645 As a consequence of strong dividend payments, 186 00:10:18.105 --> 00:10:22.285 the equity is down to half a billion in 2023 187 00:10:22.865 --> 00:10:26.405 and it's about 600 million of net financial debt. 188 00:10:26.405 --> 00:10:29.365 Then the gearing is 1.32. 189 00:10:30.225 --> 00:10:32.685 The airport, the company decided to 190 00:10:33.525 --> 00:10:37.485 leverage the business paying a huge amount of dividend. 191 00:10:37.705 --> 00:10:41.765 The dividend which was paid in 2022 is 200 million 192 00:10:42.665 --> 00:10:46.365 in twenty twenty three, five hundred and fifty 5 million. 193 00:10:46.905 --> 00:10:49.645 And when you look at the balance sheet at the end of 2023, 194 00:10:49.665 --> 00:10:51.125 you observe dividend payable 195 00:10:51.185 --> 00:10:55.645 of an additional 130 million euros. 196 00:10:56.155 --> 00:10:58.165 This is quite a huge amount of money 197 00:10:58.865 --> 00:11:00.645 and it is a financial strategy of the company. 198 00:11:01.585 --> 00:11:04.005 Now, does it put the company at risk or not? 199 00:11:04.005 --> 00:11:05.605 This is another question, 200 00:11:05.665 --> 00:11:08.005 but as far as cash flows are concerned, 201 00:11:08.185 --> 00:11:09.845 the question is can you finance growth? 202 00:11:10.385 --> 00:11:11.445 And the answer is, well, 203 00:11:11.715 --> 00:11:16.525 capital expenditures represent about 50 million in 2022 204 00:11:16.785 --> 00:11:17.805 and 2023. 205 00:11:18.225 --> 00:11:21.565 The EBITDA you remember is 400 million, 206 00:11:21.905 --> 00:11:26.365 though EBITDA is eight times CapEx as far 207 00:11:26.365 --> 00:11:27.805 as the free cash was concerned, 208 00:11:27.975 --> 00:11:30.045 there is absolutely no problem. 209 00:11:31.595 --> 00:11:33.045 Basically, there are two ways 210 00:11:33.065 --> 00:11:35.125 to calculate the return capital employee. 211 00:11:35.385 --> 00:11:38.485 The first one is to directly divide the EBIT 212 00:11:38.485 --> 00:11:39.605 by the cap employee. 213 00:11:40.785 --> 00:11:42.085 The second way is 214 00:11:42.125 --> 00:11:45.365 to remember the deploy in the more formula, which say 215 00:11:45.365 --> 00:11:49.365 that first you divide EBIT by sales, by revenues, 216 00:11:49.365 --> 00:11:50.605 and you get the return on sales. 217 00:11:50.945 --> 00:11:53.965 Second, you multiply that by revenues divided 218 00:11:54.065 --> 00:11:55.125 by capital employed. 219 00:11:55.595 --> 00:11:56.965 It's the assets productivity 220 00:11:57.465 --> 00:11:59.085 and it's name the assets turnover. 221 00:12:00.065 --> 00:12:02.605 The return on sales is more than 50% 222 00:12:02.905 --> 00:12:04.285 during the last two years. 223 00:12:04.745 --> 00:12:07.085 The company is very profitable as far as the p 224 00:12:07.085 --> 00:12:10.525 and l is concerned, but the airport is very capital 225 00:12:11.075 --> 00:12:12.525 intensive infrastructure, 226 00:12:12.545 --> 00:12:17.085 and this is why the assets turnover is 0.53 227 00:12:17.225 --> 00:12:18.285 in 2023. 228 00:12:18.945 --> 00:12:22.205 Of course, it's significantly up from 2022. 229 00:12:22.905 --> 00:12:24.125 For very simple reason, 230 00:12:24.225 --> 00:12:27.085 the capital employed is a little bit less. 231 00:12:27.175 --> 00:12:29.925 Under revenues are very much up 232 00:12:30.795 --> 00:12:33.605 from point 35 to point 53. 233 00:12:33.605 --> 00:12:36.405 There is a dramatic increase in the assets productivity 234 00:12:36.905 --> 00:12:40.765 and it shows in the rose A, which moves up from 18% 235 00:12:40.985 --> 00:12:42.445 to 29%. 236 00:12:43.265 --> 00:12:46.565 So the financial performance is absolutely strong, 237 00:12:47.225 --> 00:12:48.645 but the financial profitability 238 00:12:48.825 --> 00:12:52.445 for the shareholders is even higher for a couple of reasons. 239 00:12:52.445 --> 00:12:54.085 Further, rose is up 240 00:12:54.385 --> 00:12:57.285 and the rose is absolutely fundamental in the calculation 241 00:12:57.285 --> 00:12:58.325 of the return equity, 242 00:12:58.945 --> 00:13:02.285 but the return equity using the leverage formula is return 243 00:13:02.285 --> 00:13:03.925 capital plus the leverage effect. 244 00:13:04.585 --> 00:13:08.325 And the leverage effect is a rose minus interest multiplied 245 00:13:08.325 --> 00:13:12.365 by the gearing as rose is much more than the interest rate. 246 00:13:12.505 --> 00:13:16.325 And as the gearing is moving from 0.4 to 1.3, 247 00:13:16.625 --> 00:13:18.925 the return on equity as a consequence is going 248 00:13:18.925 --> 00:13:22.965 to move up from 17% to 47%, 249 00:13:23.215 --> 00:13:25.925 which is a dramatic increase, uh, 250 00:13:26.005 --> 00:13:27.405 to the benefit of the shareholders. 251 00:13:30.745 --> 00:13:33.045 Now, let's draw a few financial conclusions 252 00:13:33.045 --> 00:13:34.245 from these analysis. 253 00:13:35.135 --> 00:13:39.845 Again, EBITDA is absolutely stratospheric 400 million. 254 00:13:39.985 --> 00:13:43.765 It pays eight times the capital expenditures 255 00:13:44.815 --> 00:13:46.165 CapEx is 50 million. 256 00:13:46.475 --> 00:13:48.965 It's a bit less than depreciation or monetization. 257 00:13:49.365 --> 00:13:50.925 Depreciation is a consequence 258 00:13:50.925 --> 00:13:53.165 of investment in the past when you were building the 259 00:13:53.445 --> 00:13:57.085 capacity and now CapEx is probably more about 260 00:13:57.085 --> 00:13:58.525 maintenance and productivity. 261 00:13:59.725 --> 00:14:01.225 Now with the ebitda, you have 262 00:14:01.225 --> 00:14:02.785 to find on the capital expenditures, 263 00:14:02.785 --> 00:14:05.825 but you also have to finance a working capital requirement. 264 00:14:06.725 --> 00:14:09.265 The good news is that the working capital requirement is 265 00:14:09.905 --> 00:14:12.225 negative, and then as a consequence, 266 00:14:12.295 --> 00:14:13.865 when revenues are growing, 267 00:14:14.445 --> 00:14:17.785 the working capital requirement in absolute terms is up. 268 00:14:18.245 --> 00:14:22.225 But as it is negative, it's not a consumption of funds, 269 00:14:22.255 --> 00:14:25.065 it's not the use of funds, it is a source of funds. 270 00:14:25.815 --> 00:14:29.625 This is why as a con, the free cash flow is extremely 271 00:14:30.225 --> 00:14:31.305 strongly positive. 272 00:14:31.935 --> 00:14:34.065 When your free cash flow is strongly positive, 273 00:14:34.125 --> 00:14:35.905 you can return the cash to share orders. 274 00:14:36.715 --> 00:14:38.225 Today it's about dividends 275 00:14:38.845 --> 00:14:40.385 and tomorrow it's going 276 00:14:40.385 --> 00:14:42.745 to be probably about shares buybacks. 277 00:14:45.585 --> 00:14:49.445 In addition to the financial analysis of the Athens Airport, 278 00:14:49.755 --> 00:14:52.685 it's interesting to make a kind of competitive benchmark. 279 00:14:53.505 --> 00:14:56.685 We can compare Athens with Paris Jewish, 280 00:14:56.945 --> 00:15:01.285 and Frankfurt Return equity is very high for Athens 281 00:15:02.195 --> 00:15:03.265 47%. 282 00:15:03.925 --> 00:15:07.545 As far as the other three are concerned, it's about 15 283 00:15:07.605 --> 00:15:10.585 for Paris, 11 for the Swiss airport, 284 00:15:10.925 --> 00:15:12.865 and 10 for the German airport. 285 00:15:13.765 --> 00:15:16.505 As a financial profitability is extremely strong. 286 00:15:16.525 --> 00:15:19.945 The price to book is going to be extremely positive. 287 00:15:20.415 --> 00:15:23.625 It's 3.7. The price to book is calculated 288 00:15:23.625 --> 00:15:27.225 by dividing the market capitalization by the book equity. 289 00:15:28.015 --> 00:15:32.265 When it is 3.7, it simply means that one Euro invested 290 00:15:32.265 --> 00:15:36.665 by shareholders has been transformed into 3.7 euros 291 00:15:36.665 --> 00:15:38.305 of market cap of value. 292 00:15:38.855 --> 00:15:40.505 This is strong value creation. 293 00:15:41.745 --> 00:15:43.185 Interestingly, in Paris, 294 00:15:43.605 --> 00:15:45.745 the return equity is significantly less, 295 00:15:46.205 --> 00:15:48.945 but the market to book is still 2.9. 296 00:15:49.805 --> 00:15:54.705 In Zurich, it's 2.1, and in Fvu it's hardly more than one. 297 00:15:55.965 --> 00:15:59.185 The enterprise value divided by the sales 298 00:15:59.245 --> 00:16:03.145 and revenues is six years of revenues for Evans four, 299 00:16:03.215 --> 00:16:05.905 four Paris, almost six for Zurich, 300 00:16:06.005 --> 00:16:08.905 and 0.6 for Frankfort. 301 00:16:09.405 --> 00:16:12.465 But there's a very interesting multiple in which you have a 302 00:16:12.465 --> 00:16:14.545 combination of the performance 303 00:16:15.045 --> 00:16:16.705 and the growth expectations, 304 00:16:16.705 --> 00:16:19.505 which is enterprise value divided by ebitda. 305 00:16:20.325 --> 00:16:21.625 The enterprise value, 306 00:16:21.715 --> 00:16:24.905 which you remember is market capitalization plus net 307 00:16:24.905 --> 00:16:28.225 financial debts is seven years of EBITDA for assets 308 00:16:28.645 --> 00:16:30.385 and almost 10 years for Paris, 309 00:16:30.945 --> 00:16:32.705 a bit more than 10 years for Zurich. 310 00:16:33.485 --> 00:16:37.105 So basically the market anticipates strong growths for Paris 311 00:16:37.245 --> 00:16:39.945 and Zurich and not so much for assets. 312 00:16:40.515 --> 00:16:45.065 Enterprise value on EBITDA for Frankfurt is 1.8, 313 00:16:45.435 --> 00:16:47.785 which basically means that the shareholders are 314 00:16:47.845 --> 00:16:50.905 as well treated as the customers in this airport. 315 00:16:51.845 --> 00:16:55.145 As you compare the size of these airports, 316 00:16:55.875 --> 00:17:00.265 atens is not very big one, 2.6 billion market cap 317 00:17:00.775 --> 00:17:03.665 when it's 12 for Paris 6 4 0, 318 00:17:04.165 --> 00:17:06.265 and about five four Frankfurt. 319 00:17:09.165 --> 00:17:12.665 Now, let's go back to the recent listing of the airport. 320 00:17:13.645 --> 00:17:17.185 You remember that the EBITDA is financing growth, 321 00:17:17.605 --> 00:17:19.745 is financing capital expenditures, 322 00:17:20.165 --> 00:17:21.425 and does not need to finance 323 00:17:21.945 --> 00:17:23.745 a negative working capital requirement. 324 00:17:23.765 --> 00:17:25.745 So basically the objective 325 00:17:25.745 --> 00:17:28.585 of the IPO is not funding for growth. 326 00:17:29.725 --> 00:17:31.065 You don't need a penny, 327 00:17:31.645 --> 00:17:33.785 but basically there's commitment which is 328 00:17:33.785 --> 00:17:34.945 about privatization. 329 00:17:35.765 --> 00:17:38.785 As a consequence, the IPO is going to be run 330 00:17:38.785 --> 00:17:40.585 with sale of shares. 331 00:17:41.235 --> 00:17:43.625 There was a privatization commitment 332 00:17:44.165 --> 00:17:47.425 and it's going to be realized by the state. 333 00:17:48.085 --> 00:17:51.605 As a consequence, there will be changes in the shareholding 334 00:17:51.805 --> 00:17:55.005 structure because the privatization fund 335 00:17:55.525 --> 00:18:00.045 H-R-A-D-F is going to sell the 30% 336 00:18:00.145 --> 00:18:01.725 of shares it's holding. 337 00:18:02.145 --> 00:18:04.085 Who is going to buy the shares? 338 00:18:06.245 --> 00:18:08.325 I already mentioned the shareholder structure 339 00:18:09.225 --> 00:18:11.885 before the IPO AVI Alliance. 340 00:18:12.425 --> 00:18:15.925 So PSP investment holds 40% 341 00:18:15.945 --> 00:18:17.525 of the shares plus 60. 342 00:18:18.665 --> 00:18:22.845 The privatization fund holds 30% of the shares, right? 343 00:18:22.845 --> 00:18:24.365 It's going to be transformed to zero. 344 00:18:25.825 --> 00:18:30.365 The state is 25% and will remain 25%. 345 00:18:30.665 --> 00:18:34.845 The family, the copay Zulus family holds 5% 346 00:18:34.845 --> 00:18:39.445 of the shares minus something public, nothing before, 347 00:18:39.905 --> 00:18:44.165 but the public is going to hold 19% of the shares 348 00:18:44.455 --> 00:18:45.845 after the IPO. 349 00:18:46.825 --> 00:18:48.045 No change again. 350 00:18:48.305 --> 00:18:51.405 For the Greece country family, 351 00:18:51.895 --> 00:18:54.965 Coors will move from five minus to six minus, 352 00:18:55.905 --> 00:18:59.365 and in fact, as the alliance is going to reinforce its 353 00:19:00.005 --> 00:19:03.845 contribution to the equity from 40% plus 60 shares 354 00:19:04.585 --> 00:19:06.685 to 15% plus 60 shares. 355 00:19:07.065 --> 00:19:11.685 So PSP is going to actually take the control of the airport. 356 00:19:13.955 --> 00:19:15.805 What is the interesting impact 357 00:19:16.305 --> 00:19:19.085 of this controlling interest held by PSP? 358 00:19:19.795 --> 00:19:23.325 Imagine you are a retired Canadian civil servant 359 00:19:23.505 --> 00:19:25.565 and you want to travel to Greece in 360 00:19:25.565 --> 00:19:27.645 winter instead of Florida. 361 00:19:28.625 --> 00:19:29.965 Of course, you buy a ticket 362 00:19:30.545 --> 00:19:33.125 and in the airfare there are fees paid 363 00:19:33.185 --> 00:19:34.925 by the airline to the airport. 364 00:19:35.985 --> 00:19:38.925 The fees, it's about revenues for the airport, 365 00:19:39.035 --> 00:19:41.725 it's about profit, and then it's about dividends. 366 00:19:42.525 --> 00:19:44.485 Dividends are going to be paid to shareholders 367 00:19:44.785 --> 00:19:48.645 and 50% of the dividends are going to go back to PSP. 368 00:19:49.425 --> 00:19:53.405 As a consequence of PSP cashing in the revenues from the 369 00:19:53.525 --> 00:19:55.645 dividend, PSP is going to be able to pay the pension 370 00:19:55.945 --> 00:19:57.005 to the retiree. 371 00:19:57.465 --> 00:20:02.205 So here you are observing the perfect example of a circular 372 00:20:02.915 --> 00:20:04.085 financial economy. 373 00:20:06.425 --> 00:20:08.845 Now, as you want to be a little bit more serious, 374 00:20:09.505 --> 00:20:12.405 the big question is what is an airport? 375 00:20:13.435 --> 00:20:16.365 Obviously it's a transportation infrastructure. 376 00:20:17.335 --> 00:20:20.525 There are many travelers getting through the airport, 377 00:20:20.585 --> 00:20:22.405 moving from one place to the other, 378 00:20:23.105 --> 00:20:26.725 but while they are waiting for their flight, uh, 379 00:20:26.945 --> 00:20:28.205 you have to make them busy. 380 00:20:28.905 --> 00:20:32.045 You make them busy, uh, making them buy something. 381 00:20:32.065 --> 00:20:35.125 So you transform the airport into a kind of shopping mall. 382 00:20:36.225 --> 00:20:37.325 If you look at the p 383 00:20:37.325 --> 00:20:41.405 and l of Athens International Airport in 2023, you observe 384 00:20:41.475 --> 00:20:46.205 that the aeronautical assets, the activity is going 385 00:20:46.205 --> 00:20:49.125 to generate 460 something million euros 386 00:20:49.715 --> 00:20:52.925 with an EBIT D rate of 62%. 387 00:20:53.305 --> 00:20:55.405 So again, the p and l is strong, 388 00:20:55.945 --> 00:20:59.325 but assets are quite capital intensive 389 00:20:59.585 --> 00:21:01.325 and you have to pay for the investment. 390 00:21:01.385 --> 00:21:03.245 You remember the assets, turnover is low. 391 00:21:04.395 --> 00:21:09.205 Then in addition to that, there are about 140 million euros 392 00:21:09.265 --> 00:21:14.005 of non-iron revenues, the shopping mall, 393 00:21:14.005 --> 00:21:17.765 plus a number of additional services to the customer. 394 00:21:18.305 --> 00:21:19.765 And now if you look at the p and l 395 00:21:19.765 --> 00:21:24.165 and the A, b, D to revenue ratio, it's more than 80%. 396 00:21:24.985 --> 00:21:29.005 But in addition to that, not only is a premium very strong, 397 00:21:29.345 --> 00:21:31.085 but it is an asset like business. 398 00:21:31.085 --> 00:21:33.125 You have to provide square meters. 399 00:21:33.585 --> 00:21:36.965 You don't have to provide very heavy equipment 400 00:21:37.065 --> 00:21:39.445 for the aeronautical activity. 401 00:21:43.025 --> 00:21:45.325 Now, in addition to these financial characteristics, 402 00:21:45.335 --> 00:21:48.205 there are some economic characteristics of an airport. 403 00:21:48.795 --> 00:21:50.845 It's a geographical monopoly. 404 00:21:51.505 --> 00:21:54.965 You don't build an additional airport next door just 405 00:21:54.985 --> 00:21:57.125 to put these two airports in competition. 406 00:21:57.505 --> 00:22:01.525 Now, it's a monopoly local and it's about transportation 407 00:22:02.505 --> 00:22:06.445 and transport is an absolutely fundamental element in the 408 00:22:06.635 --> 00:22:08.245 development of territories. 409 00:22:08.385 --> 00:22:10.405 If you want to open up a territory, 410 00:22:10.745 --> 00:22:13.205 you create some transportation infrastructure. 411 00:22:13.905 --> 00:22:17.125 So that business can be developed. Now is the cost. 412 00:22:17.665 --> 00:22:20.165 So transportation costs are too high. 413 00:22:20.635 --> 00:22:23.365 It's going to penalize the territorial competitiveness. 414 00:22:23.995 --> 00:22:27.765 It's going to penalize local economic development. 415 00:22:28.945 --> 00:22:33.125 We all know that ESG has completely changed our lives, 416 00:22:33.555 --> 00:22:35.605 private and professional lives. 417 00:22:35.955 --> 00:22:38.525 There's a concept which is linked with ESG, 418 00:22:38.525 --> 00:22:40.325 which is double materiality. 419 00:22:41.625 --> 00:22:46.325 The single maturity is very much analyzing the impact of 420 00:22:46.995 --> 00:22:49.805 outside on inside, the impact 421 00:22:49.805 --> 00:22:53.125 of the environment at large on how the business is running. 422 00:22:53.385 --> 00:22:57.845 But now the second materiality is about what is the impact 423 00:22:57.905 --> 00:23:01.005 of our business through the environment at large, 424 00:23:01.475 --> 00:23:04.365 environment society, climate change, 425 00:23:05.005 --> 00:23:06.565 economic development, and so on. 426 00:23:07.145 --> 00:23:10.405 Of course, if the transportation costs are too high, 427 00:23:10.575 --> 00:23:14.805 there will be a strong negative impact as far as 428 00:23:15.385 --> 00:23:17.685 as of ESG is concerned. 429 00:23:20.625 --> 00:23:23.405 Now, we can get to the critical question of this wi cast. 430 00:23:23.945 --> 00:23:26.605 Should an airport be public or private? 431 00:23:27.665 --> 00:23:29.965 If it's a private asset, it's financed by investors, 432 00:23:30.085 --> 00:23:33.165 shareholders and bankers, which kind 433 00:23:33.165 --> 00:23:34.445 of return as they expect. 434 00:23:34.665 --> 00:23:37.045 The wac, the weighted average cost of capital, 435 00:23:37.815 --> 00:23:40.325 which is basically the return, which is expected 436 00:23:40.425 --> 00:23:42.685 by shareholders and bankers per ratta 437 00:23:42.685 --> 00:23:45.405 as a respective investment in the financing of the asset. 438 00:23:46.865 --> 00:23:49.765 As far as an airport is concerned today, 439 00:23:49.765 --> 00:23:54.725 the WAC is approximately 7%, taking into account the risk 440 00:23:55.065 --> 00:23:57.605 of the airport and the level of interest rate. 441 00:23:57.865 --> 00:24:01.245 Now, the return capital should be greater than 7%. 442 00:24:02.225 --> 00:24:05.845 If it's a public asset, the work is going to be much lower 443 00:24:05.845 --> 00:24:10.405 because it's about sovereign financing, probably 444 00:24:10.905 --> 00:24:12.125 around 3%. 445 00:24:12.825 --> 00:24:16.085 You understand that if the rose should be more than 3% 446 00:24:16.465 --> 00:24:20.805 or more than 7%, it completely changes the picture in terms 447 00:24:20.805 --> 00:24:22.645 of fees paid by the airlines 448 00:24:23.115 --> 00:24:26.685 because the rose is basically the fees you are going 449 00:24:26.685 --> 00:24:28.125 to collect from the airlines, 450 00:24:28.515 --> 00:24:31.685 plus some additional royalties you get out of the stores. 451 00:24:32.955 --> 00:24:34.405 Then there's an alternative. 452 00:24:35.225 --> 00:24:39.445 If you want to promote public territorial development, 453 00:24:40.195 --> 00:24:44.685 then the airport should be public state owed. 454 00:24:45.345 --> 00:24:48.925 If you want to maximize the cash you are going to get out 455 00:24:48.945 --> 00:24:51.365 of this asset, then you're privatized. 456 00:24:52.185 --> 00:24:55.365 If you want to repay the sovereign debt, 457 00:24:55.675 --> 00:24:57.525 then the asset is going to be private. 458 00:24:57.625 --> 00:25:02.085 But if you want to maximize the cash you're going to get out 459 00:25:02.105 --> 00:25:06.525 of this private asset, it might be at the expense 460 00:25:07.305 --> 00:25:10.925 of the territorial local economic development. 461 00:25:13.675 --> 00:25:17.965 When they were young, all economists studied at the 462 00:25:17.965 --> 00:25:22.805 university, the Wealth of Nations, a book published 463 00:25:22.905 --> 00:25:26.405 by Adam Smith in 1776. 464 00:25:27.805 --> 00:25:31.505 Of course, a number of people mentioned the invisible hand, 465 00:25:32.155 --> 00:25:35.705 which basically says that if you are a baker, you have 466 00:25:35.825 --> 00:25:38.505 to be free in the way you run your business. 467 00:25:38.965 --> 00:25:40.905 Let the baker work in order 468 00:25:40.965 --> 00:25:43.065 to maximize the quality of the bread. 469 00:25:43.965 --> 00:25:48.225 And it's very often mentioned as a way to legitimate a 470 00:25:48.865 --> 00:25:51.625 complete freedom in the way businesses manage. 471 00:25:52.365 --> 00:25:53.425 It has to be known 472 00:25:53.425 --> 00:25:56.785 that invisible hand represents something like 10 lines 473 00:25:57.365 --> 00:25:59.145 in the book, but Adam, 474 00:25:59.145 --> 00:26:02.185 Adam Smith insists very much in also saying 475 00:26:02.185 --> 00:26:07.105 that the state is in charge of traditional sovereign 476 00:26:07.625 --> 00:26:11.945 functions, justice, police, army, national defense. 477 00:26:12.525 --> 00:26:15.425 But Adam, Adam Smith insists on the fact that 478 00:26:16.005 --> 00:26:19.425 the state is in charge of allowing people to have access 479 00:26:19.445 --> 00:26:23.585 to health, to education, and to infrastructure. 480 00:26:24.525 --> 00:26:27.745 And this is an absolutely fundamental point when you 481 00:26:28.065 --> 00:26:29.545 consider privatizing 482 00:26:30.245 --> 00:26:32.745 or keeping public an airport, 483 00:26:35.835 --> 00:26:40.105 which decisions have been taken by geographical areas, by 484 00:26:40.665 --> 00:26:43.845 countries, by nations, about privatization or not. 485 00:26:44.855 --> 00:26:48.005 Let's first have a look at private airports. 486 00:26:48.025 --> 00:26:51.525 Listed or not, it's about the case in Europe, mostly 487 00:26:52.505 --> 00:26:54.405 United Kingdom, the airport 488 00:26:54.465 --> 00:26:58.605 of e Israel is fully completely private Asian airport. 489 00:26:59.035 --> 00:27:02.485 Same story. What about public airports? 490 00:27:02.625 --> 00:27:07.285 United States, another Anglo-Saxon strong economic power. 491 00:27:08.065 --> 00:27:11.085 Uh, it's considered that, uh, the airport should be public, 492 00:27:11.225 --> 00:27:12.965 and there is no discussion about that 493 00:27:13.675 --> 00:27:16.605 same story in Middle East and in most freaking countries. 494 00:27:17.865 --> 00:27:22.125 Now, the question is what is the argument in favor 495 00:27:22.345 --> 00:27:24.565 of public versus private? 496 00:27:25.715 --> 00:27:28.085 Some advocates of private say, oh, 497 00:27:28.085 --> 00:27:29.805 there is a productivity gap. 498 00:27:30.545 --> 00:27:32.885 The private airports are much more productive than 499 00:27:32.885 --> 00:27:34.005 the public airports. 500 00:27:34.545 --> 00:27:37.645 But there are some other studies which tend to demonstrate 501 00:27:37.645 --> 00:27:39.565 that it's absolutely not true. 502 00:27:40.665 --> 00:27:44.485 And in addition to that, let's imagine that you analyze 503 00:27:44.745 --> 00:27:47.925 and produce a correlation, which basically says 504 00:27:47.925 --> 00:27:50.605 that private airports are more productive 505 00:27:50.605 --> 00:27:51.885 than public airports. 506 00:27:52.435 --> 00:27:54.045 It's not a demonstration at all 507 00:27:54.595 --> 00:27:57.125 because you can say that it's 508 00:27:57.205 --> 00:27:59.365 because they are private, that they're more productive, 509 00:27:59.825 --> 00:28:01.045 or it's 510 00:28:01.045 --> 00:28:02.405 because they're more productive, 511 00:28:02.675 --> 00:28:04.485 that you can privatize them. 512 00:28:05.225 --> 00:28:07.245 So basically it's a correlation. 513 00:28:07.855 --> 00:28:11.525 Maybe it is certainly not a causal relationship. 514 00:28:14.945 --> 00:28:16.805 As a conclusion of this vidcast, 515 00:28:17.385 --> 00:28:19.405 we have observed the listing of an airport, 516 00:28:20.175 --> 00:28:23.125 successful operation, nicely executed. 517 00:28:24.065 --> 00:28:28.005 But as far as the question, should an airport be public 518 00:28:28.385 --> 00:28:31.885 or private is concerned, the debate is absolutely 519 00:28:32.145 --> 00:28:33.525 and fully open. 520 00:28:34.705 --> 00:28:35.495 Thank you very much.