Investors

OTPP to sell 30% stake in Bristol, Birmingham airports

The Canadian pension fund partnered with New South Wales Treasury Corporation and Sunsuper Superannuation Fund in a move aimed at lowering its airport exposure.

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Ontario Teachers’ Pension Plan has sold shares in two UK airports as it reduces the concentration of the asset type in its portfolio.

OTPP sold 30 percent of its stake in Bristol and Birmingham airports to New South Wales Treasury Corporation and Sunsuper Superannuation Fund. The deal leaves OTPP with a 70 percent stake in Bristol and a 33.8 percent share of Birmingham, while the two Australian funds will each hold a 15 percent share of Bristol and a 7.2 percent share of Birmingham. OTPP would not comment on the financial terms of the deal.

“When we looked at it at a portfolio level, there was a large concentration risk there which this transaction helps to reduce.” Claerhout

The move comes after OTPP’s 2016 acquisition of London City Airport took the fund’s airports portfolio from “large to very large”, in the words of Andrew Claerhout, OTPP’s head of infrastructure. The fund has looked to decrease its concentration in the subsector without completely divesting or ceding control of any of these assets, which also include Copenhagen and Brussels airports.

“Each of the investments in airports we felt optimistic about,” Claerhout told Infrastructure Investor. “But when we looked at it at a portfolio level, there was a large concentration risk there which this transaction helps to reduce.”

The deal represents the first time OTPP has partnered on an infrastructure asset already in the fund’s portfolio, Claerhout said, though it has acquired assets in partnership with other firms.

“This is something that will become a more prominent feature of our programme going forward,” he added. “For us to continue to deploy capital and invest in growing our portfolio, we are going to need to do that in partnership with other institutions.”

Canada’s largest single-profession pension fund, OTPP holds C$180.5 billion ($140.0 billion; €120.2 billion) in net assets including around C$18 billion in infrastructure. Even with the Bristol and Birmingham sales, which are expected to be completed in late November, airports will continue to be OTPP’s largest sector of concentration.