Blackstone-led consortium acquires 25% stake in Air Canada’s Aeroplan for $1.8bn
Blackstone and three major Canadian institutional investors have agreed to acquire a 25% interest in Air Canada’s Aeroplan loyalty programme in a transaction that values the business at CAD10bn, according to a report by Bloomberg.
Blackstone and four Canadian institutional investors have joined forces to take a 25% stake in Air Canada's Aeroplan loyalty program, valuing it at CAD10 billion. The consortium, which includes Caisse de dépôt et placement du Québec, PSP Investments, and British Columbia Investment Management Corp, is paying C$2.5 billion for their minority share.
Air Canada will maintain control over Aeroplan while using the investment to meet a C$1.2 billion bond maturity and fund share buybacks. The deal marks a significant premium placed on Aeroplan compared to the airline itself, with the loyalty program's implied valuation surpassing Air Canada's market capitalization by approximately CAD2.4 billion.
This transaction highlights the growing interest from private equity and institutional investors in loyalty programs, which generate recurring revenue through partnerships with financial institutions and other businesses. Aeroplan earns income from credit card issuers like American Express, Toronto-Dominion Bank, and Canadian Imperial Bank of Commerce, who purchase points to distribute to their customers.
Members can redeem these points for flights and other rewards, with the program boasting over 10 million global members and offering rewards across Air Canada's network as well as partner airlines, hotels, and car rental businesses. Air Canada retains the option to repurchase its 25% stake within five to eight years of the transaction's closing, along with additional repurchase rights in certain situations.
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