IX Orix Corporation

A group led by a unit of French construction company Vinci SA and Japanese financial-services firm Orix Corp. was tentatively selected Tuesday to operate two airports in Osaka in a 44-year leasing deal valued at more than $13 billion.

The deal, effectively the first privatization of a major airport operation in Japan, is part of Tokyo's efforts to tap into private-sector capital and infrastructure expertise.

The Vinci-Orix group said it was chosen by the government-owned company that currently runs the airports as the "preferred negotiation right holder." The group said it expected final documents to be completed in the next few months, with the formal transfer of operations to take place on April 1, 2016.

The group said it would pay 37.3 billion yen ($302.9 million) a year for operating rights plus certain revenue-sharing fees if revenue targets are exceeded, making the deal's value at least ¥ 1.64 trillion ($13.3 billion) over the 44-year period. The private operators also must put up a deposit of ¥ 175 billion.

Vinci Airports and Orix will each hold a 40% stake in the operating company, with companies from the Osaka region and others taking the remaining 20%. The group plans to raise ¥ 260 billion including bank loans to have on hand by the time it takes over operations.

Osaka is the center of Japan's second-most-populous urban area after the Tokyo region. The new operator is hoping to capitalize on the surge in tourists visiting Japan, many of whom visit the ancient capital of Kyoto near Osaka. It is targeting an increase of more than 65% in the number of travelers by the final year of the contract.

The two airports covered by the contract are Kansai International Airport, completed in 1994 on an artificial island, and Itami Airport, which serves domestic travelers. Together, they served about 35 million passengers in the year ended March 2015. Kansai International is popular among Asia's budget airlines, and it has direct flights to many cities in China and Southeast Asia.

Orix is no stranger to aviation, having run an aircraft-leasing operation. Vinci, which faces a slow construction market at home in France, has said it plans to expand in businesses abroad. The company already operates airports in Cambodia, Chile, Portugal and France.

In Japan's privatization efforts, Prime Minister Shinzo Abe's government hopes to generate as much as $100 billion of investment through 2022 and to improve efficiency by selling operating rights to infrastructure, including water utilities, roads and railways. Mr. Abe's government is on track to meet its target of 20 million tourists by this year or next, and it is considering whether to raise the target.

Earlier this month, government-owned Japan Post Holdings Co. and two financial units listed shares for the first time on the Tokyo Stock Exchange, raising some $12 billion.

Several companies in Japan and abroad expressed interest in the Osaka-airport operating rights initially, but many dropped out because of the large investment required or inability to build an alliance that combined local Japanese knowledge with an international airport operator's experience.

Megumi Fujikawa contributed to this article

Write to Kosaku Narioka at kosaku.narioka@wsj.com and Inti Landauro at inti.landauro@wsj.com

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(END) Dow Jones Newswires

November 10, 2015 06:45 ET (11:45 GMT)

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