A significant shake-up in European aviation infrastructure is underway as Ontario Teachers’ Pension Plan (OTPP) initiates the sale of its substantial airport portfolio, potentially valued at more than £10 billion.
The Canadian pension fund giant is currently engaged in discussions with minority shareholders who possess a 30-day right of first refusal on its holdings across five European airports: London City, Birmingham, Bristol, Copenhagen, and Brussels. The move has attracted attention from major infrastructure investors, including Australian powerhouse Macquarie.
The timing of this sale appears strategically sound, coinciding with a robust recovery in air travel demand. Recent industry indicators support this optimism, with Heathrow Airport reporting record passenger numbers this summer and notable profit increases from major carriers like British Airways owner IAG and Jet2.
Market valuations for airport assets have shown remarkable strength, as evidenced by recent transactions. The sale of Edinburgh Airport to French infrastructure group Vinci for £1.3 billion and the AGS Airports deal worth over £1.5 billion demonstrate robust multiples of 20 to 23 times annual earnings. Using similar metrics, Bristol and Birmingham airports could each command valuations exceeding £1.5 billion.
London City Airport, acquired by an OTPP-led consortium for £2 billion in 2016, is expected to attract an even higher valuation, particularly following recent approval to increase its annual passenger capacity from 6.5 million to 9 million. The Copenhagen Airport stake, where OTPP owns approximately one-third of the listed entity, adds further value to the portfolio.
The sale process faces interesting dynamics, with Birmingham Council, holding 18.7% of its local airport, unlikely to exercise its buying rights due to financial constraints. This situation potentially opens the door wider for interested parties like Macquarie, which has already submitted a comprehensive bid for all five airports.
This potential exit by OTPP from significant British infrastructure assets comes at a sensitive time for the UK government, which continues its efforts to attract major international investment into the country.
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