Airports are firmly on the agenda for institutional investors, with Industry Funds Management moving into UK assets and a battle brewing in Australia over Melbourne and Perth Airports.
IFM this week announced it would take a 35.5-per-cent stake in Manchester Airports Group (MAG), which has just succeeded in acquiring London Stansted Airport for £1.5 billion.
IFM will have 50 per cent of the voting rights at MAG, which counts Greater Manchester’s combined 10 local government councils as its other major shareholder. IFM has worked closely with MAG over the last year on the Stansted bid.
MAG also owns Manchester, East Midlands and Bournemouth Airports and has acquired Stansted – the hub for budget carrier Ryan Air – after British regulators ordered previous owner BAA to divest for competition reasons.
The MAG deal takes IFM into a new sector in UK infrastructure, following its investments in Anglian Water and telecommunications infrastructure group Arqiva.
The company is no stranger to airport investment in Australia, with around $1.8 billion invested in nine airports.
This week, the Future Fund’s foray into airports through its acquisition of the Australian Infrastructure Fund has ruffled institutional feathers, with investors claiming the fund has overestimated the value of Perth and Melbourne Airports to manipulate a pre-emptive rights process and to price rivals out of the market.
Co-investors, including IFM, Hastings Funds Management and AMP, are pondering if they can match the high valuations the Future Fund has placed on the two airports, which were a 43-per-cent and a 15-per-cent premium for Perth and Melbourne, respectively.
Through AIF, the Future Fund now has a 29.7-per-cent stake in Perth Airport and a 25-per-cent stake in Melbourne, and is keen to increase the level of those investments.