Teachers’ London office makes first European investment

The Ontario Teachers’ Pension Plan has made its first investment in Europe since it opened its office last week, buying a large stake in Birmingham International Airport.

The Ontario Teachers’ Pension Plan and Victorian Funds Management have bought a 48.25 percent stake in Birmingham International Airport from Australian investment group Macquarie and the Dublin Airport Authority for £420 million.

Jim Leech: senior vice-president, Teachers’ Private Capital.

Teachers’ owns 60.1 percent and Victorian 39.9 percent of the investment vehicle Airport Group created to hold the airport. West Midlands Districts Council owns a 49 percent interest in the airport. The airport staff has an employee share trust which holds the remaining 2.75 percent of the company.

The 48.25 percent sale means the company’s enterprise value/EBITDA was 20.5.

The airport is the fifth largest in the UK and it handles nine million passengers a year through two terminals flying to Europe, North America, India and the Middle East. 

Jim Leech, senior vice-president, Teachers’ Private Capital, said: “We look for assets that generate steady cash flows over a long period of time. This is why airports, and infrastructure generally, are attractive to us. They are not volatile, they are monopolistic in nature and so they provide a good offset for the pensions we pay our teachers.”

The runway extension to be completed in 2012 will improve Birmingham’s links to international destinations, Leech added.
Teachers’ also bought two Chilean water companies this week, acquiring a 100 percent stake in Aguas Nuevo Sur Maule and 50.1 percent of Empresa de Servicios Sanitarios del Bio-Bio both for undisclosed sums.

Teachers’ has invested in the UK before, with a 25 percent stake in water supplier Northumbrian Water and another 25 percent stake in Scotia Gas Networks.

The airport sector has also tempted buyout firms. Earlier this month Leeds Bradford Airport was bought by Bridgepoint Capital for £145.5 million.