The Ontario Teachers’ Pension Plan (OTPP), the Canadian owner of Birmingham, Bristol, and London City airports, is reportedly exploring a sale of its stakes in these UK airports as the aviation
industry experiences a post-pandemic recovery.
The OTPP, which also holds stakes in Copenhagen and Brussels airports, is believed to be in discussions with minority shareholders regarding the potential sale. The entire portfolio is valued at over £10 billion. Under the terms of their agreements, minority shareholders have a 30-day right of first refusal, although this move might instead encourage smaller stakeholders to sell their shares.
In preparation for any refusal from minority shareholders, OTPP is said to be engaging with potential external bidders, including Australian investment group Macquarie, according to the Sunday Times. The Canadian fund’s stakes in these airports range from 25% to 70%, making it a significant player in their operations.
Air travel recovery sparks investor interest
The aviation industry has seen a significant rebound since the COVID-19 pandemic, which grounded flights and caused widespread disruption. For instance, Heathrow Airport reported a return to profitability earlier this year, with record-breaking weekly passenger numbers in July. This resurgence has attracted interest from other investors, particularly in the infrastructure sector.
Recently, rival Canadian pension fund PSP Investments acquired the operator of Aberdeen, Glasgow, and Southampton airports from Ferrovial and Macquarie in a £1.5 billion deal. Such transactions highlight the growing appeal of UK airports among global investors.
Spotlight on foreign investments
The UK government, under Labour, has been monitoring foreign investments closely, aiming to replicate their success while encouraging greater domestic involvement in infrastructure. Policymakers hope to ensure that pensioners benefit directly from the returns generated by these investments.
Canada’s Maple 8 funds
Both OTPP and PSP Investments belong to Canada’s renowned "Maple 8" pension funds, which collectively manage approximately $2 trillion (£1.1 trillion) in taxpayer-backed retirement schemes for public-sector workers, including teachers and healthcare staff. These funds, established after significant pension reforms in the 1990s, have gained a reputation for their strategic investments in global infrastructure projects, including those in the UK.
Future of UK pension megafunds
The UK government is currently consulting on plans to consolidate local government retirement schemes and workplace pension programmes into a smaller number of large-scale funds. These domestic "megafunds" are intended to rival international players like the Maple 8, with the goal of bolstering investment in UK infrastructure and ensuring long-term financial benefits for UK pensioners. Photo by N Side Road, Bristol Airport by M J Richardson, Wikimedia commons.