EUROPE - Infrastructure asset managers say new investment opportunities could be emerging for institutional investors as a flurry of new deals are expected to come to the market in the management of air and rail operators.

The Spanish government's ministry for infrastructure and the economy announced in Friday it is creating "a new model" for the management of its airports which will eventually allow private investors to take a 30% stake in airport services.

A statement issued by the infrastructure minister Magdalena Alvarez said under the new system all activities will continue to be largely owned by the state, but air traffic management and airport services will be split.

Spanish authorities say air traffic control will stay in the hands of the government, but the ability to invest in European airport services is becoming increasingly attractive, according to Marcus Ayes, director of transactions and capital projects at First State investments, as Spain, Portugal and the UK could all be forced to open investment in the near future.

More specifically, he notes AENA, which is currently state-owned, along with the Spanish-owned operator in the UK, BAA, and the Portugese airports operator, could face both "fiscal and regulatory pressure" to break up their monopolies, giving pension fund investors a fresh route in, while German rail operator Bahn could become a listed entity later this year.

"We would not look at motorway services station, but at the core infrastructure spectrum, which is unaffected by the recent credit crunch. Railways, toll roads, airports are seen in times of uncertainty as a bit of a safe haven for capital," said Ayes.

"It is fair to say vendors, if they can afford not to sell, probably will not sell in the current climate. But the UK government is certainly under pressure itself and looking to realise gains from its assets. The Spanish airports operator is now looking, the Portugese airports privatisation is in progress and there is the possibility of BAA being forced to break its holding."

Bahn's decision to consider a flotation is a development First State is also watching at present, said Ayes, though speculation suggests it could be some time before the firm acts one way or the other.

That said, the carving of infrastructure investments along geographic lines is becoming the norm, according to Ayes, so core/core plus offerings are likely to become more targeted for pension fund investors.

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