North American Infrastructure Investment Fund - Airport Due Diligence
Nyras was asked by an investment fund to review a unique airport in North America, from the point of view of airline customers.
Our team has extensive experience of working with significant infrastructure-focused funds to consider airport investment opportunities. We firmly believe there is no ‘cookie cutter’ solution to valuing an airport or in predicting traffic flow, so we start every project with a fresh approach.
Working alongside the investor and key advisers, including engineering, legal and environmental experts, we quickly identified that the only way the airport could achieve the predicted traffic volumes was to secure traffic from specifically gauged aircraft. This posed an additional problem because the required aircraft were being phased out of the many fleets.
Without significant regulatory change, the volume potential of the asset would be limited and, while still attractive, the airport was unlikely to achieve the numbers suggested in vendor due diligence. Our team constantly ask ‘why?’ and ‘how?’ to ensure that every angle has been considered. The level of scrutiny we apply can be very involved, but ultimately provides our clients with greater visibility.
On this occasion, our client did not secure the asset. While this was disappointing at the time, within a year it emerged that the Nyras risk assessment had identified two significant issues that later materialised and heavily limited the potential of the asset going forward. While our assessment was deemed conservative at the time, subsequent events have proved it to be extremely accurate.
The investor is a long-term client of Nyras and they have since asked us to review two other airport assets with the same critical eye that we applied in this particular case.