USS clinches A$110m Brisbane Airtrain deal

The UK pension has bought the unlisted public company holding the rail concession, with CP2 co-investing 1% of the total and managing the asset.

The UK’s Universities Superannuation Scheme (USS), a pension fund, has completed the purchase of Brisbane Airtrain, the unlisted public company that holds the concession for the rail link connecting Brisbane centre to the airport. 

The deal will see USS pay A$110 million (€90 million; $115 million) in cash for the company, via subsidiary USS Axle, with Australian investment firm CP2 chipping in 1 percent of the purchase price and taking on asset management duties. 

“USS’ ability to all equity fund the transaction, without the need for external funding allowed us to agree and execute the acquisition of Brisbane Airtrain quickly and efficiently,” commented USS investment manager for infrastructure Rob Horsnall. 

The elevated rail link runs over 8.5 kilometres, including two stations at Brisbane Airport. The line has been in operation since 2001 and recorded 1.76 million passenger trips in the 12 months to June 30, 2012. It has generated about A$6.6 million in earnings before interest, tax, depreciation and amortisation.  USS’ concession to run Brisbane Airtrain expires in 2036. 

The UK pension, which manages some £36 billion (€42 million; $54 million), is no stranger to Australian infrastructure, holding stakes in Sydney’s Airport Link and Melbourne’s ConnectEast toll road. The USS infrastructure team currently manages circa £1 billion of infrastructure assets and has a mandate to invest up to 7 percent of the pension’s assets in infrastructure, over the medium term. 

While Brisbane Airtrain was an all-equity deal, USS invests across the capital structure. Prior to closing the acquisition of the Australian rail link, the pension had provided £95 million of 20-year debt to Affinity Water, a UK utility owned by Infracapital Partners and Morgan Stanley Infrastructure Partners.