KKR and Skip Infrastructure Fund acquire 75% stake in Queensland Airports; billionaires take control

CAPA - Centre for Aviation anticipated an explosion of M&A activity arising out of the sale of Sydney airport a couple of years ago, both in Australia and internationally.

That didn't happen for a variety of reasons, but in the last 12 months since 2023 there has been some movement in on-sales of lease equity in Australia (not new sales, because all the airports that matter there have long been privatised).

It has culminated in a transaction at the end of Sep-2024 that resulted in three of the four shareholders in Queensland Airports Ltd (QAL) - which has four facilities in northeastern Australia, including the principal one at Gold Coast - selling their combined 75% share to an (unnamed) consortium of the US private equity firm KKR and the Australian tech financier Skip Capital, which KKR needs on board to satisfy local ownership regulations.

It is KKR's first acquisition in this sector, although it has occasionally tried in the past.

A big driver on the sell side is the overexposure of many of Australia's funds to airports, with some investors committed to several funds putting their money into the same assets; this coupled with nervousness about the failure of the air transport market to get back to pre-COVID levels, as it has been able to do so elsewhere.

That hasn't stopped KKR leaping in blindly, its hand held perhaps by the Skip CEO, who has deal-making experience - at least with airports, though that isn't the same as running them.

It is a strange and surely unforeseen outcome of the privatisation exercise that began in 1997 that a clutch of four small airports, most of them remote, and which together host fewer than 10mppa, should now be owned by two billionaire families and a US private equity firm.

However, it is all part of a sea change in the sector, which is likely to see further activity; also in the northeast of the country, and also out west in Perth, where the action has now shifted.