Citi Infrastructure out of race for Gatwick airport

By John Bowker and Quentin Webb

LONDON (Reuters) - A consortium led by Citigroup's infrastructure fund was dropped on Wednesday from the battle to buy London's Gatwick airport, leaving just two groups vying to take over Britain's second-busiest airport.

The decision is a fresh blow for the Citi Infrastructure Investors fund and its ally, Vancouver Airport Services, which only weeks ago saw their winning bid for Chicago's Midway airport collapse because they could not secure financing.

Gatwick owner BAA, majority owned by Spain's Ferrovial, said the bid from the consortium, known as Lysander Gatwick Investment Group, was "uncompetitive on price and there were no assurances on deliverability."

But a spokesman for the consortium criticized the decision as "bizarre in the extreme."

"Our bid is the only one fully funded and will deliver the airport's promised capital expenditure," he added, although he would not comment on the level of the bid.

Boston-based John Hancock Life Insurance Company, an initial member of the bidding group that also co-bid for Chicago Midway, left the consortium at the end of January, the spokesman added. The insurer could not immediately be reached for comment.

Gatwick's Regulated Asset Base (RAB), a way of valuing infrastructure assets, is 1.6 billion pounds ($2.43 billion), but analysts have said it is unlikely to fetch that much, with debt scarce and airline traffic down sharply.

Some press reports have put the Lysander bid at just under 1.2 billion pounds.