GIP, IFM in running for Midway Airport

Global Infrastructure Partners and Industry Funds Management are interested in operating Chicago Midway International Airport. A February RFQ generated healthy interest.

Both Global Infrastructure Partners (GIP) and Industry Funds Management (IFM) are in contention to become the private operator of Chicago Midway International Airport (‘Midway Airport’). 

Bidding on a long-term lease of Midway Airport began in January with a request for qualification (RFQ) due Friday, February 22. 

Leasing Midway Airport to a private operator would mark a precedent-setting public-private partnership (PPP or P3). Luis Munoz Marin International Airport (‘LMM’), located in Puerto Rico, a US territory, is the lone privately run air field in the US.  

A spokeswoman for the City of Chicago confirmed GIP and IFM were each named to a bidder shortlist along with: 

– AMP Capital Investors, the A$128 billion ($133 billion; €102 billion) asset manager and infrastructure investor from Australia, owner of Launceston Airport, Melbourne Airport and Newcastle Airport in the UK; 

– Corporacion America Group, a private airport operator headquartered in Argentina;  

– Great Lakes Airport Alliance, a private consortium teaming Groupo Ferrovial, operator of London's Heathrow Airport, and Macquarie Group, operator of Brussels and Copenhagen airports; 

– Hastings Fund Management and its air field platform investment, Incheon International Airport. 

Private equity firm ACO Investment Group, formed in 2010, was eliminated as a bidder. 

Alberta Investment Management Corporation, Allstate Investments, Barclays Capital, Goldman Sachs Infrastructure Partners, John Hancock Life Insurance, the Ontario Teachers’ Pension Plan, TIAA-CREF and Ullico Infrastructure Fund expressed interest in financing the Midway Airport P3.    

GIP, meanwhile, is investor and manager of Gatwick Airport in London and Edinburgh Airport. IFM, teamed with Manchester Airport Group, in which it owns a 35.5 percent stake, for the bid. 

The US Midwest city will communicate with each bidder to determine the procurement process. Credit Sussie Group is advising Chicago.

Chicago published the RFQ after receiving US Federal Aviation Administration approval. The lease offered a “less than” 40-year term, the RFQ said. 

The RFQ officially re-opened a previously unsuccessful attempt to privatise the air field: a prior deal to lease Midway Airport to Citi Infrastructure Investors, John Hancock Financial and Vancouver Airport Services was reached in 2008. 

But the consortium was unable to finance the deal. By 2009, as the global financial crisis peaked, the P3 was cancelled. 

The ‘Windy City’ called its proffered lease “significantly shorter” than a typical transaction without citing a precedent. A prospective private partner would be expected to “finance, operate, maintain and improve Midway Airport,” according to the RFQ. 

The US Midwest city noted revenue generated from a P3 would go to pay down debt dating back to a 1996 project to refurbish the 89-year-old airfield. 

In addition, the city would “retain ownership” of Midway Airport, and “receive a percentage fee that would grow over time”. 

“We must fully evaluate if this could be a win,” said Lois Scott, chief financial officer of the city, in a press statement announcing the RFQ.

Scott, appointed by Mayor Rahm Emanuel after Emanuel took office in 2011, previously worked as a consultant whose company advised both Chicago as well as Pittsburgh to privatise parking. 

“[The Midway Airport procurement] process and approach will be thorough and open, in stark contrast to the lease deals of the past,” Lois said.

Chicago leased the ‘Skyway Toll Bridge System’ in 2005, as well as its on-street parking in a harshly criticised 2008 concession. 

In talking up a P3 for Midway Airport, Chicago, in its RFQ, called the airfield a “marquee infrastructure asset,” deeming a would-be lease a “landmark transaction”.