February 28, 2019 / 5:24 PM / 7 months ago

Canada's OMERS eyes Brussels Airport stake as bid deadline looms: sources

LONDON/FRANKFURT (Reuters) - Canada’s pension fund, Ontario Municipal Employees Retirement System (OMERS), has emerged as a strong contender for a 36 percent stake in Brussels Airport ahead of final bids due in mid-March, two banking sources said.

OMERS, the former owner of London City Airport, will compete with a consortium formed by Dutch pension fund manager APG and Australian infrastructure fund QIC and a second consortium led by Canada Pension Plan Investment Board (CPPIB) which includes Dutch pension fund PGGM and local Belgian insurance player AG, part of Ageas.

According to ratings agencies, Brussels Airport’s earnings before interest, tax, depreciation and amortization (EBITDA) are around 300 million euros. At a valuation of 20 times EBITDA, Macquarie’s stake would be worth around 2.2 billion euros including debt.

Macquarie has backed Brussels Airport for around 10 years but hired JPMorgan in early 2017 to help it exit as this is the last remaining asset of its first European infrastructure fund.

A legal dispute between the Australian infrastructure fund and fellow shareholder Ontario Teachers’ Pension Plan (OTPP) on pre-emption rights over the asset stalled the sale of the transport hub until the dispute was resolved last summer.

OTPP, which bought 39 percent in 2011, gave up its pre-emption rights over the asset and agreed to information being circulated to potential buyers of Macquarie’s stake.

Macquarie, OMERS and CPPIB did not immediately respond to a request for comment. APG, AG and PGGM declined to comment.

Other infrastructure, pension and sovereign wealth funds that had expressed interest, including Abu Dhabi Investment Authority and Germany’s Allianz among others, decided against it, several other sources said.

The airport, which serves as a hub for Lufthansa-owned Brussels Airlines, had nearly 26 million passengers last year, a rise of 4 percent compared to 2017.

European airports have been a lucrative business for private equity firms and pension and infrastructure funds over the past few years because they offer strong growth potential from increasing global travel and services such as shops, on-site hotels and car parking.

The French government is widely expected to launch the sale of its stake in French airport group Aeroports de Paris (ADP) later this year.

In Britain, France’s Vinci took advantage of a Brexit hit to UK asset prices to buy a majority stake in London’s Gatwick for 2.9 billion pounds ($3.7 billion).

Additional reporting by Philip Blenkinsop in Brussels and Toby Sterling in Amsterdam; editing by Elaine Hardcastle

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