Exclusive: Direct investors vie for London City Airport

Consortia involving OTPP, Wren House and PSP are jostling with Cheung Kong in a race to buy the GIP-owned hub.

A contest to buy London City Airport is heating up ahead of an imminent bid deadline, with at least three parties still in the running, according to four people with knowledge of the process.

Sources told Infrastructure Investor that a consortium comprising Ontario Teachers’ Pension Plan (OTPP) and Kuwait Investment Authority’s Wren House is going up against a team that includes Canada’s Public Sector Pension Investment Board, as well as Hong Kong-based conglomerate Cheung Kong Infrastructure.

China’s HNA Group, the owner of Hainan Airlines, is also understood to have shown interest. The Canada Pension Plan Investment Board and Australia’s Macquarie, previously among the interested parties, won’t be placing bids for the asset, sources added. It was unclear whether Italian developer Atlantia had also given up on the auction.

Prospective buyers are being asked to submit their offers by a 19 February deadline. Sources said valuations advanced by potential bidders would likely surpass £2 billion (€2.6 billion; $2.9 billion).

London City Airport is majority-owned by New York-based Global Infrastructure Partners (GIP), which first bought the hub in 2006 alongside a subsidiary of US insurer American International Group for £742 million.

Traffic at the inner-city hub hit a record last year, posting an 18.8 percent rise on 2014 to 4.3 million passengers. The airport is understood to make annual profits of about £72 million.

All of the firms cited above either declined to comment, did not respond to requests for comment or could not be reached for comment at press time.