The

Ontario Teachers’ Pension Plan Board

, a longtime investor in

airports

overseas, has sold its interests in the last three of them: Birmingham Airport, Bristol and London City Airport, all in the United Kingdom.

 

The buyer is

Macquarie Asset Management

, and the price was not disclosed by either party.

Beginning in the early 2000s, Teachers’ gobbled up airports as part of the fund’s growing infrastructure portfolio, which was seen as an excellent source for steady returns and a hedge against

inflation

risk.

The global COVID-19 pandemic was challenging, forcing many airports to take on more debt after the virtual halt in air travel in March 2020. Then came the sluggish return to pre-pandemic traffic over many months.

The news came on the heels of another airport announcement by the pension fund giant

—

a pioneer among Canadian institutional investors in the sector

— which on June 13 said it was selling its

stake in Brussels Airport Co. NV/SA to a Flemish public investment firm.

While there have been other international airport sales this year by Canadian pension funds, including the

Caisse de dépôt et placement du Québec

selling off the last of its stake in London’s Heathrow Airport in February, interest has increased in the domestic sector as the Canadian government looks for ways to entice institutional investors

—

including the country’s large pension funds

—

to invest more at home.

Deb Orida, chief executive of the Public Sector Pension Investment Board, said last week that her fund is looking to boost domestic investments and pointed to PSP Investments’ expertise in airport infrastructure and operations through subsidiary AviAlliance, which purchased three airports this year in the United Kingdom: Aberdeen, Glasgow and Southampton.

“We have airport operating expertise, and capital to pair with that operating expertise,” Orida said. “So, if the opportunity were to become available to invest in the Canadian airports, I think we would be very well positioned to do that and do it in a way that adds value not only to our pensioners, contributors and beneficiaries, but also to the users

—

the passengers of the airport.”

Former Bank of Canada governor

Stephen Poloz

looked at ways to increase Canadian institutional investment in the country’s airports last year, when he was tapped to lead a task force charged with boosting domestic pension investments.

In March, the federal government laid the groundwork with a new policy statement from Transport Canada that said pension funds can enter commercial subleases to invest in and develop airport lands with the not-for-profit airport authorities that operate 22 major facilities across the country, including Toronto’s Pearson International Airport.

The statement laid out other avenues for institutional investment as well, including through for-profit share capital subsidiaries created by the airport authorities, which would allow investment on airport lands for developments such as terminals, hotels and shopping centres.

The structure of these subsidiaries would allow private investors to buy or be issued shares, so long as the airport authority maintains a controlling interest.

A third avenue for investment would allow institutional investors to provide subcontracted services for certain aspects of airport operations.

On Wednesday, a Teachers’ spokesperson declined to say whether the $266.3-billion pension fund would be interested in airport investments in Canada despite selling off international stakes.

 

“(It’s) too early to speculate on where the proceeds will be allocated,” Dan Madge said.

He characterized the rapid unloading of airports in Europe and the United Kingdom over the past few months as the culmination of a long, successful run in the sector.

“It was a very good outcome for the fund,” he said.

“Our first investment was in the early 2000s, so it has been a long investment period for us.”

Teachers’ first investment in U.K. airport infrastructure was in 2001, and it bought direct stakes in the airports in Birmingham in 2007 and Bristol in 2008.

 

Eight years later, Teachers’ boosted its U.K. presence with the purchase of a 25 per cent stake in London City Airport, a regional hub for business and vacation travel. Together, the three airports manage tens of millions of passengers annually.

Over the years, the Canadian pension giant has also bought and sold stakes in airports in major cities in Australia and Denmark.

After Teachers’ acquired its stake in Bristol’s airport, traffic increased by 72 per cent, with the airport serving more airlines and boasting the fastest recovery among major U.K. airports following the global pandemic. More than £300 million has been invested in the airport over the last decade.

Passenger growth at Birmingham increased by 35 per cent to more than 13 million after Teachers’ acquired its stake, and more than £425 million has been invested in expansion and modernization over the past 18 years.

The expansion included an extension of the runway, the opening of a new pier, a new baggage system, and upgraded security and check-in areas, while multiple new flight routes were added, with some 30 airlines connecting travellers to more than 165 destinations.

Meanwhile, more than £600 million was invested in London City Airport to accommodate larger aircraft and expand facilities, with projects including the U.K.’s first remote digital air traffic control tower.

Teachers’ said the airports under its ownership also played a central role in regional economic growth, collectively contributing more than £3.7 billion in “gross value added” and 37,600 jobs.

“Each airport plays an important role in its region and, with all currently undergoing expansion (programs), will continue to grow and deliver for their passengers, communities and the broader economy,” said Charles Thomazi, Teachers’ senior managing director and head of infrastructure in Europe, the Middle East and Africa.

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“We are confident that (the airports) will continue to flourish and are pleased to be passing the baton to new investors Macquarie as they support them in the next stage of their growth.”

• Email: bshecter@nationalpost.com

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