Palisade lands $284m Sunshine Coast airport privatisation

Two Australian super funds are co-investing with the asset manager in the 99-year lease of a regional hub Down Under.

Palisade Investment Partners has agreed to commit a combined A$372 million ($284 million; €267 million), on behalf of fund LPs and co-investors, to expand and run a regional airport in Queensland for nearly a century.   

The fund manager will pay A$82 million to the Sunshine Coast Regional Council, the Sunshine Coast Airport’s current owner, for the rights to operate the hub under a long-term lease, while preparing another payment of A$290 million to be made upon completion of a new 2.45km runway and airport facilities, scheduled for 2022. 

The transaction will be funded through equity commitments from Palisade’s Diversified Infrastructure Fund, as well as direct investments from two of Palisade’s institutional clients, LGIAsuper and VicSuper. 

The hub, located 100km north of Brisbane, was the fastest-growing airport in the country last year in terms of scheduled passenger volumes, according to the Australian Bureau of Statistics. It carries about one million passengers annually, with direct flights available to Sydney, Melbourne, Adelaide and Auckland. 

The council will use the proceeds to deliver the A$347 million runway construction project and repay loan to the federal government. The airport expansion scheme, to be built by the council itself, is expected to reduce operational constraints at the airport and facilitate new routes. In an interview with Infrastructure Investor last May, Sunshine Coast’s Mayor Mark Jamieson said it was seeking to add Singapore and Perth into its network of destinations after the expansion. 

Palisade has also appointed Dennis Chant, the former chief executive of Queensland Airports, to assist with the airport privatisation and governance of the business. The Sunshine Coast Airport will join Palisade’s portfolio of Australian regional hubs, which already includes the Darwin, Alice Springs and Tennant Creek airports. 

The firm said it would be seeking opportunities to deploy further capital in the Sunshine Coast region. As of end of 2016, Palisade had A$2.3 billion in funds and commitments under management.