USS continues direct deal spree

The UK pension has acquired an additional stake in Sydney’s airport link, its second such investment in the country in less than a year.

Universities Superannuation Scheme (USS) has bought a 49.9 percent stake in Airport Link Company (ALC) from Westpac Essential Services Trust, which is managed by Hastings Funds Management.

The £40 billion (€48 billion; $65 billion) UK pension already held a small stake in the business. Sydney-based infrastructure investment manager CP2, a co-investor in ALC, will provide on-going asset management services.

Constructed between 1995 and 2000, Sydney’s $900 million Airport Link was the largest transport infrastructure project associated with the city’s Olympic Games. The Airport Line tunnel, which is 9 kilometres-long and 23 metres under the surface, links the city’s main railway station, its central business district (CBD) and 300 train stations in Greater Sydney and the wider region. Airport Link Company operates the Green Square, Mascot, Airport Domestic and Airport International train stations, which are all located in the tunnel.

It is the second such business bought by USS in the country, after the pension paid AUS$110 million (€74 million; $100 million) for Brisbane Airtrain in December last year. The company has a 33-year concession to run the 8.5 kilometre-long elevated railway that connects the domestic and international terminals of Brisbane Airport with the city.

The transaction further confirms USS’ appetite for airport-related assets, after the pension last month became a major shareholder in NATS, one of the world’s largest air traffic management businesses. The deal followed its £392 million investment for 8.65 percent of London Heathrow, Europe’s busiest airport and the third-busiest in the world.

The deal also underlines the broader interest of investors for airport assets. Canadian pension La Caisse, Singapore’s GIC, Qatar Holdings and the China Investment Corporation already count as shareholders in Heathrow, while Greater Manchester Pension Fund formed part of a consortium that was selected to build Manchester’s Airport City development in October.

Fund managers have also proven particularly active, with Ardian buying London Luton alongside Spanish operator AENA in August and IFM partnering with Manchester Airport Group to buy Stansted last January.