An investor consortium that includes Citi Infrastructure Investors has won a $2.5 billion (€1.7 billion), 99-year concession to further develop and operate what could become the first major privatised airport in the US, Chicago Midway Airport.
The consortium, called The Midway Investment and Development Corporation, includes Vancouver Airport Services, which is a 50-50 partnership between the Vancouver Airport Authority and Citi Infrastructure Investors and John Hancock Life Insurance Company. Vancouver Airport Services has stakes in 18 airports in seven countries.
The contract award is part of the US Federal Aviation Authority’s experimental privatisation programme for five US airports. The programme, established by Congress in 1997, explores privatisation as a way of generating access to private capital for airport improvement and development.
Citi’s consortium beat out three other investor groups that in June were shortlisted by the City of Chicago to bid for the Midway concession. These included a consortium of Macquarie Group-affiliated funds, German infrastructure developer Hochtief bidding with Goldman Sachs Global Infrastructure Partners and Morgan Stanley Infrastructure Partners bidding with Aeroports de Paris.
In 2007, Chicago Midway Airport handled more than 19.3 million passengers and 304,000 aircraft operations. Alongside Chicago’s O’Hare International Airport, it serves the third largest metropolitan area in the US, with a population of 10 million. The city had previously estimated the value of the airport lease at $3 billion.
For Citi, the announcement comes on the same day that its $12.8 billion bid alongside Spanish infrastructure investor and developer Abertis Infraestructuras to operate the Pennsylvania Turnpike expired without approval from the state’s legislature.
Citi’s alternative asset management arm launched Citi Infrastructure Investors in May 2007 to act as a platform for the group to invest in large institutional infrastructure projects around the world. It is currently investing out of its debut fund of $3 billion, whose target has been raised to $5 billion.
Christopher Witkowsky to this article.