Toronto airport said to be worth $3.7B in possible sale
ottawa — Canada is considering the sale of at least a minority stake in Toronto Pearson International Airport that values the country’s busiest airport at about C$5 billion ($3.7 billion), according to people familiar with the matter.
The stake sale, just one of many options laid out in a report to government prepared by Credit Suisse Group, would free up billions of dollars for new infrastructure projects, the people said, asking not to be identified because the matter is private.
A federal advisory panel recommended last year the government look at selling its airports, and the C.D. Howe Institute estimates privatisation of the country’s eight major airports could rake in between C$7 billion and C$17 billion, with Pearson alone fetching as much as C$6 billion. Selling the airports would cut costs for travellers and create opportunities for more shops and services, the nonpartisan research institute said.
“The subject is still being studied and no decision has been taken,” Marc Roy, a spokesman for Transport Minister Marc Garneau, one of the lawmakers overseeing the consideration of privatisation. “We won’t comment on any rumors.” The government has so far declined to release the Credit Suisse report. Selling slightly less than half of Pearson would be the easiest of several scenarios Credit Suisse presented to Prime Minister Justin Trudeau’s government in a report last year, according to the people. That scenario would allow the government to retain control of the airport while raising billions for other projects.
Sam Pollock, the head of Brookfield Asset Management’s infrastructure group, has said there would be a “feeding frenzy” among institutional investors if airports were put up for sale.
The confidential Credit Suisse report outlined the potential benefits and pitfalls of various scenarios of such a move. Trudeau downplayed airport sale expectations last month when he said he was more “interested in other things.” Sources familiar with the government’s thinking said the privatisation of any of the nation’s airports is still being considered.
I think it makes a lot of sense to go down this road right now. The market for assets like this is at an all-time high Steven Robins, Author of C.D. Howe report
Credit Suisse’s findings represent “one element of a broad range of information the government will consider” in weighing airport privatisation, Dan Lauzon, a spokesman for Finance Minister Bill Morneau, said by email on Friday. “The government has taken no decisions at this time.”
Canada is the world’s only country where the largest airports are operated by non-profit airport authorities, who lease land owned by the government, a structure that constrains the ability to fund expansions and creates a disincentive for certain developments, according to the C.D. Howe report.
Pearson has emerged as the top candidate for sale, the people said. The country’s second-busiest hub, the Vancouver International Airport, is considered to be more complicated and less likely than the sale of a partial or full stake in Pearson, the people said.
“I think it makes a lot of sense to go down this road right now. The market for assets like this is at an alltime high,” C.D. Howe report author Steven Robins said in an interview. It’s essential that government set up its regulatory process correctly and not constrain long-term options — such as an agreement for Pearson that limits development of other airports around Toronto, he said.
Government would see annual airport revenue fall to $110 million in provincial and federal taxes, from C$305 million currently collected in rent, Robins’s report estimated.