Carrie Hurihanganui: Auckland Airport CEO on the interest in its $1.4 billion capital raise

Auckland Airport says it's had no shortage of interest in its $1.4 billion capital raise. 

It will use the money to drive down debt and upgrade the airport, runway, and other infrastructure dating back to the 1960s. 

The upgrade is expected to take about five years to complete. 

Auckland Airport Chief Executive Carrie Hurihanganui told Mike Hosking the capital raise had been signalled to the market. 

She says there's been a very positive response from institutional investors and will start seeking retail investors today. 

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Episode Transcript

Speaker 1 (00:00):
Balkome. The airport's launched at one point four billion dollar

(00:03):
capital raise. The money is for the ongoing Rejube, of course,
which has a bill of about six and a half billion.
As Andrew was telling us a few moments ago, round
a third of that's going for the domestic terminal alone.
The CEO at the airporter's Kerry Hudahan and Oui of
course and is with us. Good morning, Good morning mine.
What was your assessment of the risk in going to
the market for such a large amount of money.

Speaker 2 (00:24):
What's been interesting, Mark? At the point we announced the
program back in twenty twenty two, you know, it was
signaled that was a key question. The market was asking
is there going to be a need for equity, and
at the time we said, well that depends on business performance,
the rate and pace of the capital bill, et cetera.
So it had been signaled to the market and we

(00:44):
were pleased. We've we've had a very positive response so far.
We looked to wrap up the institutional placement this morning
and then we'll move on to the retail officer.

Speaker 1 (00:52):
So no question is going to be filled and filled
successfully and easily.

Speaker 2 (00:57):
Sorry, could you repeat them mute?

Speaker 1 (00:58):
Would it be filled easily.

Speaker 2 (01:01):
Well, certainly through the positivity we had yes yesterday. We
think it, we think it will be. We're going to
wrap that up this morning. But yeah, very very positive
soundings came back.

Speaker 1 (01:10):
So if you've got a story to tell, there is
plenty of money out in the New Zealand economy to
be collected up.

Speaker 2 (01:17):
Well, in the New Zealand economy as well as Australia,
you know, there is absolutely investment money out there MIC
and they are looking for opportunities or the right opportunities
for them.

Speaker 1 (01:29):
Tell us about the timing and the connection with the
economic story in this country currently and whether that had
any connection at all.

Speaker 2 (01:38):
Well, I think, as I said, we'd signaled the need
for it. I think you have an environment where we
do know that we've got a more muted economy of
Actually our figures last month even just from a traffic perspective,
you had domestic passengers five percent down, you had international
passengers three percent out. So we've kind of got the
split split market at the moment of what we're seeing.

(02:00):
But investors are looking to say, well can look through that.
They're generally not looking at the next four quarters for
investment like an infrastructure company like an airport, they are
looking long run over the coming years.

Speaker 1 (02:12):
Given you're an international monopoly of sorts, does that help you.

Speaker 2 (02:19):
Well? Generally for investors when they're looking at infrastructure related stocks,
you know, and whether in the Australian market you've got
transurban and other airports they are looking for. I guess
the factors to say, is there investment being made? Is
there a potential growth pathway here that they can see
that makes sense that that investment that they're making that
they expect to see a return in medium to long term.

Speaker 1 (02:42):
The discount you went to the market with, who comes
up with that? How literally does that work?

Speaker 2 (02:49):
Great question? I mean there's a lot of time and
effort that's spent in obviously going through the due diligence
process as well as understanding the market expectation comparable raises.
So yes, many an evening has been spent on that night.

Speaker 1 (03:02):
And what literally happens? You go, let's go seven sixty five, No,
I reckon seven fifty two. And then is it literally
that simple or not?

Speaker 2 (03:11):
No? You generally look as far as the discounts from
an next dividend kind of adjusted, you've got the last
close so the day before for example, or in this
case it would have been last Friday, the thirteenth of September.
You also look at things like a five day view
Apple volume weighted average, So there's a number of things.
It's the well worn path in terms of looking at
what that performance has been. And certainly we've gone to

(03:34):
the market at the discount that we did. You know,
it hasn't been sub seven dollars since back during COVID.

Speaker 1 (03:41):
Time the Hawkins deal. This is my ongoing and fascination
with infrastructure in this country. How tight's the Hawkins deal
or the Hawkins contract at eight hundred million dollars? Is
it eight hundred full stop or it's eight hundred and
we'll see where we end up.

Speaker 2 (03:55):
So the contract is structured as a construction management agreement,
so it's you know, in the New Zealand market you
don't tend to get sixed price contracts per se. That
means we've engaged them to manage the construction process, methodologies,
sequencing for curement. We have a role where there is
shared risk in that might particular when you look at

(04:15):
a twenty four to seven operating environment like ours, that
our contract is not going to have influence on some
of the decisions. They're not going to take all that
risk on. But we've got milestones and various things in
place to ensure that we can manage and mitigate those
risks along the way.

Speaker 1 (04:32):
Well, I've got you the Hamilton thing yesterday with Jetstar
along with Dunedin. Is that part of you charging too much?
Any alignes are now going to tell you what will
go elsewhere.

Speaker 2 (04:43):
It's an interesting one. I mean, I think there's been
a kind of some supposition on that. I think there's
two things One that if I'm on us from an
ensetting perspective, additional international capacity and connectivity between New Zealand
Australia is a really good thing. I think last time
you and I spoke, we talked about tourism sitting at about
eight percent recovery. Australia is one of the slowest markets
to recover, So if we can stimulate that, that's a

(05:05):
great thing. In terms of the pricing, frankly, I don't
buy that we actually are cheaper than comparable airports in
New zeal at the moment. And if you look at Jetstar,
they've grown twenty nine percent domestically out of Auckland in
the last year and actually thirty three percent internationally. So
I guess the question you might ask is to say,
is are we seeing airlines actually identifying opportunities for them

(05:27):
to grow in a market that's got relatively muted competition.
Right now, you've got two airlines they have ninety percent
of the market's share across the Taisman.

Speaker 1 (05:34):
Always good to have you on the program, appreciate it
very much, Kerry Hoho to hang Anoui, who's the CEO
at Auckland Aport.

Speaker 2 (05:39):
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