SPAIN - The privatisation of Spain's largest airports, Madrid and Barcelona, is expected to attract interest from both local and foreign pension funds, according to an infrastructure fund manager.

Hans Meissner, managing partner and founder of the infrastructure fund EISER Infrastructure, said the two airports were certain to attract interest from institutional investors, as well as infrastructure funds and construction companies.

Meissner said: "This type of asset presents a big advantage for pension funds, as they offer inflation protection and a stable cash yield."

Both of airports are very competitive, he said, with high traffic volumes. Madrid's Barajas airport has the capacity to handle more than 70m passengers a year since the Spanish government invested more than €6bn to expand it in 2006.

However, Meissner pointed out that airports require regular capital investments, adding that investors should be aware of their unique risks.

"Generally speaking, big airports perform well, but, in the case of a strong recession or other unexpected events, the flow of passengers might be reduced, and, therefore, the return on investment will be significantly affected."

Foreign pension funds are expected to express interest for the two airports and could then partner up with local players, he said, if they decide to bid for the acquisition of those assets.

A partnership with local investors that know the Spanish market and its regulation would limit the risk taken by foreign counterparts and enable them to bring more equity into the deal, he added.

"The best option for foreign pension funds would be to team up with local pension funds, which are aligned with their strategy and share the same liabilities," Meissner said.

EISER Infrastructure is considering the assets. Meissner also said that, if the fund decides to make an offer, it would then find local partners such as pension funds and/or other infrastructure funds.

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