The glass front of the departure hall appears to be blown out after terrorist attacks at Zaventem Bruxelles International Airport on March 22, 2016 in Brussels, Belgium. The Ontario Teachers’ Pension Plan, which manages roughly $155-billion in net assets on behalf of 311,000 working and retired teachers, owns a 39-per-cent interest in the Brussels airport, where two bombs were detonated during the morning rush hour Tuesday.Sylvain Lefevre/Getty Images
Canada's pension funds have been snapping up stakes in airports, toll roads and shipping ports to bolster their portfolios with assets that are often seen to be safe, steady and cash-gushing over the longer term. But Tuesday's series of deadly explosions at a pair of commuter hubs in Belgium show how owning infrastructure is clearly not without risk.
The Ontario Teachers' Pension Plan, which manages roughly $155-billion in net assets on behalf of 311,000 working and retired teachers, owns a 39-per-cent interest in the Brussels airport, where two bombs were detonated during the morning rush hour Tuesday. The fund issued a statement to extend its sympathy to the victims and added that it's "in close contact" with the airport and Belgian government officials. A Teachers spokeswoman declined to comment further.
Like other Canadian pension funds, Teachers wants to diversify its holdings away from volatile stock and bond markets into infrastructure, private equity and other more illiquid assets that can provide long-term returns to meet the plan's future pension payment liabilities. Airports have become more enticing assets to own for these funds, despite the heightened security since Sept. 11, 2001.
"The question is how much is the value of the airport affected by this sort of event. In terms of operating revenues, probably not much," Alan White, a finance professor at the University of Toronto, said in a telephone interview. "Air travel goes on. There might be a little bit of a slowdown, but I wouldn't see it as being terribly serious."
Even if the value declines and Teachers did want to unload the stake, any potential buyer would be used to taking on the risk that comes with buying a busy airport.
"Whether or not there is a market for this [airport] 10 or 15 years down the road is always an open question," Mr. White added. "These are pretty illiquid investments. Only certain people are interested in or capable of taking them on. I think that's more of an issue, but they knew that going in."
Nearly 23.5 million passengers travelled through Brussels airport last year. It is served by 77 airlines that travel to 226 destinations around the world, according to its website.
Teachers acquired its stake in the Brussels airport in 2011 after swapping assets with Australia's MAp Airports, the operator of the Sydney airport. The Toronto pension fund acquired its interest in Brussels and 30 per cent of the Copenhagen airport in Denmark by exchanging them for its long-held stake in an Australian airport and sweetened the deal with some additional cash. Co-shareholders include Macquarie European Infrastructure Funds, which control 36 per cent, and the Belgian state, which owns 25 per cent.
Teachers also owns a slice of the Birmingham airport and the Bristol airport in Britain.
In February, Teachers led a consortium of bidders, including the Ontario Municipal Employees Retirement System's Borealis Infrastructure and Alberta Investment Management Corp., to purchase England's bustling London City Airport, which is located in the heart of London and caters to business passengers.