Thursday, April 26, 2018

OMERS Sells Stake to VINCI Airports?

Benefits Canada reports, OMERS sells stake in international airport portfolio:
The infrastructure arm of the Ontario Municipal Employees Retirement System has entered an agreement to sell its stake in Airports Worldwide Inc., a portfolio of airport assets and management contracts.

“OMERS first invested in AWW in 2009,” said Ralph Berg, executive vice-president and global head of infrastructure for OMERS Private Markets, in a press release.

“We have focused our efforts since that time on positioning the asset for long-term success and are very proud of the value we have created with this investment for OMERS members.”

OMERS, which expects the transaction to close later in 2018, didn’t disclose the financial details of the sale.

“OMERS has worked closely with the management teams across the group to grow the portfolio, optimize performance and build strong relationships with airline partners and other stakeholders,” said Juan Camargo, director of OMERS Infrastructure, in a press release.

“We are grateful to AWW management for their efforts and wish them continued success.”

Vinci Airports, the buyer of OMERS’ stake, is growing its collection of airport assets, adding to the 36 it already manages in Europe, Asia and South America.
Ted Liu of Private Capital Journal also reports, Vinci Airports to acquire Airports Worldwide from OMERS:
OMERS Infrastructure along with co-investors have entered into a definitive agreement to sell Airports Worldwide, Inc. to Vinci Airports, a VINCI Concessions subsidiary. Financial terms were not disclosed.

The transaction is expected to close later this year. O’Melveny served as OMERS legal advisor and Citi served as OMERS financial advisor.

Houston, Texas based Airports Worldwide, formerly ADC & HAS Airports Worldwide, Inc., is majority owned by OMERS with HAS Development Corporation and Airport Development Corporation (ADC) as minority shareholders.

In April 2009, HAS Development Corporation, an affiliate of the Houston Airport System (HAS), and Airport Development Corporation (ADC), a Canadian airport developer, and OMERS Strategic Investments formed a strategic partnership operating under the name ADC & HAS Airports Worldwide, Inc.

In February 2013, OMERS Strategic Investments became the majority equity shareholder in Airports Worldwide.

Active on two continents, Airports Worldwide is a portfolio of airport assets and management contracts located in the United States, Costa Rica, Northern Ireland and Sweden.


News Release

VINCI Airports enlarges its network of airports in the United States, the United Kingdom, Costa Rica and Sweden

24 APRIL 2018 – 8:30 AM – ACQUISITIONS

– Signature of an agreement to acquire the portfolio of Airports Worldwide, comprising two freehold property airports, three airports under concession and four under full management contracts as well as three partial management contracts in American airports1
– A strategic move into the USA, the world’s largest air transport market, that also bolsters our presence in Europe and Central America
– A worldwide network expanded to 45 airports welcoming more than 182 million passengers per year2

VINCI Airports, a VINCI Concessions subsidiary, is acquiring nine new airports (two freehold property, three concession, four management contracts) and three partial management contracts in American airports following acquisition of the airport portfolio held by Airports Worldwide1.

The operation boosts VINCI Airports’ global network, which now includes 45 airports in 11 countries and on three continents. It also increases the number of passengers welcomed in its airports by 25.6 million to more than 182 million per year.

The portfolio acquired by VINCI Airports consists of:

– Two freeholds property: VINCI Airports is acquiring a 100% stake in Belfast International Airport in Northern Ireland, which welcomed 5.8 million passengers in 2017, and a 90.1% stake in Skavsta Airport near Stockholm, Sweden, which welcomed 2.1 million passengers in 2017.

– Three airports under concession: VINCI Airports is acquiring a 100% stake in Orlando-Sanford International Airport (Florida, USA), which welcomed 2.9 million passengers in 2017, under a concession contract covering operation of the current terminal and car park with a residual term of 21 years; together with co-control stakes in Costa Rica’s two major airports, i.e. a 48.75% stake in Juan Santamaria International Airport in San José and a 45% stake in Daniel Oduber Quiros International Airport in Liberia, which served 4.8 million and 1.1 million passengers in 2017 respectively, under concession contracts with residual terms of eight and 13 years.

– Four full management contracts covering Hollywood Burbank Airport, which welcomed 4.7 million passengers in 2017, and Ontario International Airport, which welcomed 4.2 million passengers in 2017, in California; and Macon Downtown Airport and Middle Georgia Regional Airport in Georgia3.

– Three partial management contracts covering US airports: Atlantic City International Airport in New Jersey, Raleigh Durham International Airport in North Carolina, and part of the international terminal at the airport in Atlanta, Georgia, the world’s largest airport in terms of traffic.

This acquisition allows VINCI Airports to make a strategic move into the USA, giving it an entry point into the world’s largest air transport market.

It also strengthens VINCI Airports’ presence in Europe, where the group already operates 12 airports in France and 10 in Portugal, plus the Nikola-Tesla airport in Belgrade, Serbia, for which VINCI Airports signed a concession contract on 22 March this year. Lastly, the acquisition of the two main airports in Costa Rica, an increasingly popular tourist destination, strengthens VINCI Airports’ positions in South and Central America, where it manages the airports in Santiago, Chile and Salvador, Brazil, together with six airports in the Dominican Republic including the airport in Santo Domingo.


—————–
1 Agreement subject to the approval of the relevant authorities and the partners.
2 In comparison with 156,6 million passengers welcomed in 2017, including traffic of fully consolidated companies and 100% of equity accounted companies held on January 1, 2017 on a full-year basis, plus Salvador airport, which VINCI Airports has been managing since January 2, 2018, but excluding Kobe (Japan) and Belgrade (Serbia) airports.
3 Macon Downtown Airport is a business airport; Middle Georgia Regional Airport welcomes some 2,000 passengers per year.

About VINCI Airports

VINCI Airports, a top 5 global player in the international airport sector, manages the development and operation of 36 airports located in France, Portugal (including the Lisbon hub), Cambodia, Japan, Chile, Dominican Republic and Brazil. Served by around 250 airlines, VINCI Airports’ network handled 157 million passengers in 2017. Through its expertise as a comprehensive integrator and the professionalism of its 12,000 employees, VINCI Airports develops, finances, builds and operates airports, leveraging its investment capability, international network and know-how to optimise the management and performance of existing airport infrastructure, facility extensions and new-build construction projects. In 2017, its consolidated revenue amounted to €1.4 billion.
www.vinci-airports.com

About VINCI

VINCI is a global player in concessions and contracting, employing close to 195,000 people in some 100 countries. We design, finance, build and operate infrastructure and facilities that help improve daily life and mobility for all. Because we believe in all-round performance, above and beyond economic and financial results, we are committed to operating in an environmentally and socially responsible manner. And because our projects are in the public interest, we consider that reaching out to all our stakeholders and engaging in dialogue with them is essential in the conduct of our business activities. VINCI’s goal is to create long-term value for its customers, shareholders, employees, and partners and for society at large.
For its part, OMERS put out a press release, OMERS Infrastructure Agrees to Sale of Airports Worldwide to Vinci Airports:
OMERS Infrastructure, the infrastructure investment manager of OMERS, the defined benefit pension plan for municipal employees in the Province of Ontario, Canada, today announced that it has entered into a definitive agreement to sell its interests in Airports Worldwide (“AWW”) to Vinci Airports.

Active on two continents, AWW is a portfolio of airport assets and management contracts located in the United States, Costa Rica, Northern Ireland and Sweden.

"OMERS first invested in AWW in 2009. We have focused our efforts since that time on positioning the asset for long-term success, and are very proud of the value we have created with this investment for OMERS members. We wish the AWW team and Vinci all the best, as the company takes this next step in its evolution," said Ralph Berg, Executive Vice President & Global Head of Infrastructure, OMERS Private Markets.

“OMERS has worked closely with the management teams across the group to grow the portfolio, optimize performance and build strong relationships with airline partners and other stakeholders. We are grateful to AWW management for their efforts and wish them continued success.” added Juan Camargo, Director, OMERS Infrastructure.

The transaction is expected to close later this year. Further financial information will not be disclosed.

O’Melveny served as OMERS legal advisor; Citi served as OMERS financial advisor.

ENDS

About Airports Worldwide


The AWW portfolio comprises operations at 12 airports located in the United States, Costa Rica, Northern Ireland and Sweden. AWW interests include long-term management contracts or concession agreements at the Orlando-Sanford International Airport in Florida, and Costa Rica's two main airports, Juan Santamaria International Airport (San José) and Daniel Oduber Quiros International Airport (Liberia). AWW also owns as freehold airports Belfast International Airport in Northern Ireland, and the majority interest in Stockholm Skavsta Airport.

In addition, AWW provides services under management contracts at seven US airports, including Hollywood Burbank Airport and Ontario International Airport (California), Atlantic City International Airport (New Jersey), Raleigh Durham International Airport (North Carolina), Macon Airport and Middle Georgia Regional Airport (Georgia) and the International Terminal, including Concourses E and F, at the Hartsfield Jackson Atlanta International Airport (Georgia).

About OMERS

OMERS Private Markets (OMERS Infrastructure and OMERS Private Equity) invests globally in infrastructure and private equity assets on behalf of OMERS, the defined benefit pension plan for Ontario’s municipal employees. Investments are aimed at steady returns to help deliver strong and sustainable pensions to OMERS members. OMERS Private Markets’ diversified portfolio of large-scale infrastructure assets exhibits stability and strong cash flows, in sectors including energy, transportation and government-regulated services. OMERS has employees in Toronto and other major cities across North America, the U.K., Europe, Asia and Australia. OMERS is one of Canada's largest defined benefit pension funds with net assets of more than C$95 billion. Visit www.omersprivatemarkets.com for more information.
Go back to read my comment on OMERS' 2017 results. At the time, OMERS 2017 Annual Report wasn't available.

It's now available here and I urge you to take the time to carefully read their annual report, it's packed with information.

I want to skip to page 38 of the 2017 Annual Report to go over OMERS' Infrastructure performance (click on image to read):


As you can see, OMERS was busy selling infrastructure assets in 2017. In particular, along with Ontario Teachers', it sold its stakes in Britain’s High Speed 1 (HS1) rail project to a consortium of funds including HICL Infrastructure and South Korea’s National Pension Service (see details here).

And now it just announced it's selling an important stake in Airports Worldwide Inc. (AWW), a portfolio of airport assets and management contracts.

Details weren't provided but it's worth asking yourself why is OMERS selling some great infrastructure assets?

Last week, I covered AIMCo's 2017 results and spoke with Dale MacMaster, the CIO, who shared this with me on their infrastructure activities:
Dale told me AIMCo's Infrastructure portfolio delivered 9.2% in 2017, a 2% value add. He told me they took advantage of frothy markets and high demand to trim certain infrastructure assets which either didn't fit in the portfolio or still have great cash flows, a solid counterparties and provide good inflation protection but they wanted to realize on those gains and invest elsewhere. He said they are now taking much bigger stakes in infrastructure and their focus is on assets like ports where they see a backlog and good growth potential. The focus in Infrastructure is more in growth areas.
There is no doubt that several large Canadian pensions are selling infrastructure assets which they feel are fully valued. They're selling for all sorts of different reasons but chief among them is strong demand and they're getting top dollar for these assets.

There is a misperception that because infrastructure and real estate assets are very long-term, you never need to sell. Sure, it's hard to sell prized assets because you might never be able to buy them back at a reasonable price but many Canadian pensions do take advantage of strong markets to trim infrastructure assets from time  to time. There's nothing wrong with this.

What will do they do with the money? AIMCo is investing in ports, that's where it sees opportunities in infrastructure. OMERS might be doing the same thing, I don't know what their exact plans are in the short run.

What I do know is that infrastructure remains an important asset class but brownfield infrastructure assets are richly priced to say the least.

Still, for VINCI Airports this was a perfect fit to their existing portfolio of airport assets. This company is a world leader in airport concessions and even if they paid full value for these assets, it's a great long run move for them.

Below, VINCI Airports confirmed its place among the world’s top five airport operators, with a network of 35 facilities in six countries on three continents. Its 11,000 employees welcomed more than 132 million passengers. As the long-term partner of public authorities, local stakeholders and airlines, the company optimizes the operations and services of its airports to unlock their potential while creating an enhanced passenger experience. Leveraging its expertise and strengths in airport financing, design, operations and project management, VINCI Airports continues to open the world, contributing to regional development and serving the mobility needs of people everywhere.

And an interview with VINCI Airports’s CIO, Erik Schnekenberger, at the 2017 SITA IT Summit. He reveals how it is using technology to manage operational excellence and deliver consistent service, despite having such a wide global workforce.

Like I stated above, it's a great company, a world leader in operating airports, and one that OMERS will surely do deals with again.


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