UPDATE 2-Ontario Teachers says plans to increase stake in UK's Bristol Airport

Mon Jul 28, 2014 2:14pm EDT

(Adds comment from pension plan)

LONDON/TORONTO, July 28 (Reuters) - Canada's Ontario Teachers' Pension Plan wants to increase its stake in Britain's Bristol Airport from the current 49 percent as Australian asset manager Macquarie Group is reportedly seeking a buyer for its 50 percent stake.

"We plan to increase our ownership, and in fact, we feel that we are the right buyer, given our history and expertise. Bristol Airport is an asset in which we already hold a significant stake, so we know and understand it well," Deborah Allan, the pension fund's spokeswoman, said in an email to Reuters.

The deal is worth up to 250 million pounds ($424.6 million), a source who is closely monitoring the situation said on Monday.

The pension fund has the right of first offer for the 50-percent stake owned by Macquarie, the world's largest infrastructure asset manager, which was sounding out buyers for its holding, British newspaper The Sunday Times reported.

Ontario Teachers' Pension Plan is eyeing the stake as it seeks to expand its infrastructure holdings from $12 billion to around $18 billion. The deal could take place this year, the source said.

"Given the right of first offer, Ontario Teachers is likely to purchase the stake, but this will of course be based on an appropriate valuation," the source said, adding that discussions have not commenced but are expected to start "very soon."

European airport deals typically attract a valuation of 15-17 times core earnings, or EBITDA.

"It's in a geography we know and like, and we have a well-established airport investment team with sector expertise and excellent relationships," Allan said.

Macquarie, Australia's top investment bank, holds its stake in Bristol Airport - the UK's ninth-busiest - as part of its 2004 Macquarie European Infrastructure Fund (MEIF). The company was not immediately available for comment. Sydney Airport holds the remaining 1 percent.

Ontario Teachers, which also has a stake in Birmingham Airport, originally invested in Bristol Airport in 2002 and increased its stake in 2009. Bristol Airport posted a pretax profit of 25.8 million pounds in 2013.

The 1.5-billion-euro MEIF is coming to the end of its life cycle, so Macquarie will either have to sell its holdings and return money to investors or seek their permission to roll them over into its second or third infrastructure funds.

The MEIF sold its holding in Sweden's Arlanda Express high-speed rail service in July, after putting it up for sale in 2013. The company also has stakes in UK ferry company Wightlink Shipping and Brussels Airport. ($1 = 0.5888 British pounds) (Reporting By Freya Berry in London and Andrea Hopkins in Toronto; Editing by Lisa Jucca, G Crosse and Erica Billingham)