Independent infrastructure manager Ancala Partners has completed the acquisition of a 45% interest in Liverpool John Lennon Airport for an undisclosed sum on behalf of its funds. London-based Ancala focuses on mid-market infrastructure investments.
Institutional investors are under pressure to generate additional yield, and allocations to infrastructure projects are on the rise. With more private equity funds chasing infrastructure assets, signs are that competition to acquire stakes in airports is only going to increase in coming years.
Liverpool John Lennon is the U.K.’s 12th-busiest airport, with throughput of more than 5 million passengers in 2018. In March 2018, the airport announced its Strategic Vision to 2030 initiative, which includes plans to serve more destinations and to increase annual passenger numbers to 8 million travelers.
Cargo throughput at Liverpool John Lennon reached 200 tons in 2018, the highest volume since 1995, according to Tom Hughes, business development director for Wynne Aviation Services, the exclusive cargo aircraft handling agent at the airport. Hughes told FreightWaves that, with 2019 volume to date reaching 365 tons, Wynne Aviation predicts cargo throughput to reach approximately 500 tons for the full year.
The airport’s cargo catchment area is northeast England, with a focus on the automotive and retail sectors, according to Hughes. Flybe is the only airline offering belly hold capacity at Liverpool John Lennon, although Wynne Aviation also processes charter operations there.
Until its sale in February to the U.K.-based Connect Consortium, backed by Virgin Atlantic, U.K.-based Aer Lingus regional operator Stobart Aviation and private equity firm Cyrus Capital, Flybe was the largest independent regional airline in Europe, operating between 81 airports across the U.K. and Europe. Flybe was put on the block in November 2018 after a profit warning in October prompted plans to cut costs and reduce operations.
Flybe, which operates 75 mostly Q400 aircraft, received interest from multiple parties for all or part of the business.
Ancala purchased 35% of the airport from Peel Group, a U.K.-based private real estate investment and infrastructure company, and 10% from Liverpool City Council, which invested in the airport in 2016. Peel and the council retain 45% and 10% interests, respectively.
While total value of the transaction remains undisclosed, in April the council announced plans to sell half of its current stake and almost £6 million of its preference shares.
“I believe the acquisition is positive news for cargo; Ancala has a track record of working well with Peel,” Hughes said.
The Liverpool John Lennon transaction is not the first deal involving the two entities. Ancala and Peel Group announced in May 2017 the launch of a joint venture to establish U.K.-based Leep Utilities, an independent multi-utility operator that owns and operates regulated and nonregulated utility networks.
Peel Group is a family-owned business with principal investments encompassing land and property, transport and logistics, energy, retail and leisure. In December 2018, Peel Group sold the company’s 89% share in U.K. regional airport Durham Tees Valley along with 819 acres of surrounding land to Tees Valley Combined Authority for £40 million ($53 million). Peel Group bought the airport for £500,000 in 2003.
Spence Clunie, managing partner at Ancala, said, “Transport infrastructure is a highly promising segment of the market, so we are delighted to be acquiring a stake on behalf of our investors in such a prestigious regional airport. Liverpool John Lennon has already seen substantial growth in recent years and we see strong prospects for this continuing. “We look forward to growing our partnership with the Peel Group, with whom we have a strong track record of creating value in infrastructure assets.”