OMERS and AIMCo have hired Morgan Stanley to advise them on options including a potential sale of their combined 50% stake in London City Airport, sources said.

The stake in the UK airport is not expected to come to market for some time, according to the sources, one adding that it will be a “late 2025” process”. Wren House is not looking to offload its 25% stake in London City, the sources added.

The move by OMERS and AIMCo takes place as Macquarie Asset Management looks set to buy Ontario Teachers’ Pension Plan’s 25% stake in the airport. The Australian investor last year filed an offer for OTPP’s stakes in five European airports in Copenhagen, Brussels, Bristol and Birmingham as well as London City.

The other shareholders in London City were recently asked if they wished to exercise their pre-emption rights to match Macquarie’s offer and buy OTPP’s stake. But sources said the shareholders decided in recent days against doing so, leaving Macquarie free to press ahead with its acquisition of the Canadian pension plan’s stake in the airport, the sources said.

OTPP, OMERS, AIMCo and Wren House paid in 2016 about GBP 2bn for London City Airport, equivalent to a roughly 40 times EBITDA multiple, although it has since been impacted by the pandemic with passengers numbers totalling some 3.4m in 2023 versus 5.1m in 2019.

The airport’s shareholders have also had to manage its large debt pile, with its shareholders last year injecting some GBP 135m of extra equity into the business to part repay a GBP 533.5m loan facility and manage cash flow requirements including interest payments.

The airport’s recovery is in part linked to taking short-haul capacity from Heathrow, which is more focused on long-haul flights. The UK government has also thrown its support behind the airport’s plans to increase its capacity from 6.5m passengers to 9m.

Macquarie, OMERS, OTPP and Morgan Stanley declined to comment. Wren House and AIMCo did not respond to requests for comment.