Gatwick Airport: An infrastructure investment that paid off handsomely for CalPERS

July 22, 2019 | Alternative Investments, News

Airports for sale are scarce, and CalPERS is hanging on though other institutions sold out in 2018

When the California Public Employees’ Retirement System (CalPERS) invested $155 million in Gatwick Airport nine years ago, they envisaged 32 million passengers annually.

Gatwick is already catering to 46 million passengers a year. And it can only get better from here – because Heathrow, the other London airport, is at full flight capacity.

Unsurprisingly, the pension group’s original investment of $155 million is now worth over $1.24 billion.

Not easy to repeat Gatwick

There is fierce competition for good quality core infrastructure investments. Moreover, airports for sale are hard to come by.

Vinci SA, a French company, agreed to acquire a 50.01% stake in Gatwick for $3.7 billion in 2018. The pension fund sat out the sale. But other institutions such as the Abu Dhabi Investment Authority, the National Pension Service of Korea, and Australian’s Future Fund Board of Guardians cashed in partially.

Apart from the capital appreciation, the California pension group also earns a revenue stream from the profits of the airport.

Infrastructure has been lucrative for CalPERS

The fund has earned over 14% annualized on its infrastructure investments over the past decade.

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