Toronto island airport/
A consortium backed by investment fund manager AGF Management Ltd. won the crowded bidding war for Toronto Island's Billy Bishop airport terminal.
InstarAGF Asset Management Inc., a one-year-old fund, and a group of investors, including Toronto sports magnate Larry Tanenbaum, agreed to pay an undisclosed amount to buy the terminal from Porter Airlines.
The agreement ends six months of what insiders described as intense jockeying by domestic pension funds and other investors to buy control of a small airport named after a Canadian flying ace in the First World War. Porter Air's codename for the auction was Project Avery, which was Mr. Bishop's middle name.
Sources familiar with the bidding said some offers exceeded $700-million, a rich price for the country's ninth largest airport, which is subject to municipal traffic limitations because of its proximity to residential areas.
Canadian pension funds and other international state-owned funds have been active buyers of some of the world's leading airports in recent years to capitalize on long-term growth expected from airplane traffic and retail stores that cater to travellers idled in airports.
Greg Smith, who co-owns InstarAGF with AGF Management, said airports are a "sought after asset class" that are increasingly "hard to come by."
Blake Goldring, AGF's chairman and chief executive, said the airport investment is a "perfect example" of the alternative investments the fund manager is seeking as it diversifies away from its mutual fund business, which is losing customers to less expensive mutual funds and ETF's managed by competitors.
Porter Airlines put the terminal up for sale in August after its planned initial offering of shares failed to attract enough buyers in turbulent markets. Robert Deluce, Porter's chief executive officer, said the sale "provides for a significantly stronger cash position and balance sheet." The sale, he said, will improve the financing terms for its planned addition of Bombardier CS100 planes that it seeks to acquire in the next year.
Joining InstarAGF on the consortium are a number of Canadian and global companies. Toronto-based Nieuport Aviation Infrastructure Partners GP, named after the airplane Billy Bishop flew, will operate the terminal. Other investors include Kilmer Van Nostrand Co., a private equity firm whose chief executive officer is Mr. Tanenbaum, the long-serving chairman of Maple Leaf Sports & Entertainment Ltd. Other partners include undisclosed high-net worth investors advised by JPMorgan Chase & Co. and Partners Group AG.