Pension trio buys Chicago Skyway for $2.8bn

Ten years into the 99-year Chicago Skyway concession, the original project consortium is selling 100 percent of its holding to a trio of Canadian pension funds for $2.84 billion.

The 7.8-mile Skyway was the US' first toll road privatisation, awarded to a consortium of Spanish developer Ferrovial (55 percent) and Macquarie Atlas Roads and Macquarie Infrastructure (combined 45 percent) for $1.83 billion. 

Picking up where the original consortium left off, The Canada Pension Plan Investment Board (CPPIB), Ontario Municipal Employees Retirement System and Ontario Teachers' Pension Plan will each take on a 33.33 percent stake in the Skyway Concession Company, which plans to continue operations and maintenance as per the original agreement. Each of the pensions reportedly came to the table with equity checks of $512 million.  

According to Reuters Breakingview analyst Kevin Allison, that places the total project equity value at the end of the first decade at around $490 million and total debt valuation at nearly $2.3 billion at the time of the sale. 

In the original concession, Ferrovial and Macquarie provided $880 million in equity, according to the Federal Highway Administration, with a refinancing one year later of $370 million. Ferrovial reports that $249 million will be returned to the company from the sale of its 55 percent, which was initiated on June 21. Macquarie Atlas expects gross proceeds of roughly $100 million. 

“Skyway represents a rare opportunity for us to invest in a mature and significant toll road of this size in the US,” said Cressida Hogg, managing director and head of infrastructure at CPPIB. “This investment fits well with CPPIB's strategy to invest in core infrastructure assets with long-term, stable cash flows in key global markets.” 

The Skyway concession contract ends in 2104.