The EBRD is supporting the development of Sofia Airport with an indirect equity investment in SOF Connect, the consortium majority-owned by Meridiam that was set up to operate and manage the airport under a 35-year concession. The EBRD’s total investment of €74.2 million will include a €57.9 million equity investment and a further €16.3 million of contingent equity. This investment follows a €50 million EBRD loan to SOF Connect signed in 2020.
Supporting opportunities amid the Covid-19 crisis
Sofia Airport is the sixth largest international airport in central and eastern Europe, handling 7.1 million passengers in 2019 and 2.9 million passengers in 2020. As a gateway to Bulgaria and a hub for flights between Europe, the Middle East and the Caucasus, the airport is well connected. However, there is still significant potential to develop both mid- and long–haul routes in the future. The 35-year concession envisages investing a minimum of €624 million throughout this time, with a new terminal being built within the first 10 years.
The Covid-19 pandemic has placed a significant strain on the concessionaire’s plans for Sofia Airport, and so the EBRD’s support has been instrumental in ensuring the project’s success. It has also resulted in the adoption of a “building back better” approach, ensuring all development has a sustainability focus.
The airport’s long-term concession through a successful public-private partnership (PPP) is crucial in encouraging governments of neighbouring countries to continue developing their plans for similar project schemes. This is particularly pertinent in the post-pandemic era, when many governments have significant infrastructure plans. This particular transaction will show, beyond any specific project and country context, that the successful tendering and implementation of PPPs is achievable. It will also show public entities that complex infrastructure projects can be financed with strong involvement and interest from the private sector.
Investing with impact
Sofia Airport was built in the 1930s and expanded in 2006. The partners intend to significantly invest in modernising the airport and, in particular, upgrading its environmental and health and safety performance. The EBRD’s equity investment will support Meridiam’s ambition to make Sofia Airport a model for sustainability, leveraging the opportunity for capex and operational upgrades. As part of its concession, Meridiam has committed to improving corporate climate governance and to applying the recommendations of the Task Force on Climate-related Financial Disclosures. It also aims to make the airport carbon neutral by 2036 by eliminating direct greenhouse gas emissions and making alternative fuels available for airlines.
Meridiam brings to the project significant experience in airport development and operation. As well as delivering sustainable environmental and health and safety improvements, the company plans to focus on the core businesses and strategic development of the airport while diversifying revenue sources.