Bregal Sagemount announced earlier in September a significant strategic investment in Bradford Airport Logistics. To learn more about the deal, PE Hub spoke with Michael Kosty, partner and co-founder of the New York-based private equity firm.
Bradford, based in Houston, counts major airports in the US and the UK among its customers.
Bradford aims to help streamline the delivery of goods, including food and beverages, to airports by using Centralized Receiving and Distribution Centers (CRDCs). Instead of these goods going through and clogging up TSA checkpoints, Bradford does the security screening, consolidates products from multiple vendors, and delivers those products to concessionaires in the terminal, Kosty explained.
“There are several benefits from the CRDC model, including enhanced security, streamlined operations, an improved traveler experience, and increased revenue generating opportunities for the airport,” he said. “There are sustainability benefits as well.”
In the US, the company has a presence in more than 20 airports, including New York’s LaGuardia, Salt Lake City International Airport and Boston Logan. Bradford also services London’s Heathrow.
The investment from Sagemount will help the company to pursue a number of growth opportunities, including embarking on a Design-Build-Finance-Operate-Manage (DBFOM) initiative for CRDCs in other airports. “This enables airport customers to get a CRDC in place more quickly and efficiently, and we think it’s going to be attractive to a certain subset of our customer base,” Kosty said.
The DBFOM strategy will allow Bradford to offer “a turn-key solution” to airports whereby they no longer have to identify an existing building, or utilize their own financing capacity, to move to a CRDC model. “With DBFOM, Bradford brings this together in one package,” Kosty said. “The penetration of CRDC is still pretty low in the US today and there is an interesting opportunity to expand both in the US and internationally.”
With a presence in the UK, there is a “meaningful opportunity to expand into continental Europe, where the CRDC concept is more nascent,” he said.
There is also an opportunity to grow through technological enhancements that will be geared towards increasing efficiency in the CRDC operations as well as enhance its research and development, automate labor-driven processes, and enhance capabilities to track and manage CRDC workflows, and optimize delivery schedules and inventory management, he said.
“Our customers today are airports, but we do think that there are other opportunities in markets such as rail stations or corporate campuses,” Kosty said.
There is also growth with existing customers, the Sagemount partner said. “There are other services we can offer to our customers that fit well with what we do today, for example helping airports with their operations and maintenance workflows by utilizing our logistics capabilities.”
Airports were initially hit by low traffic during the pandemic, but as restrictions eased, there was an influx of travelers. “Bradford really helped its airport customers reopen in a very effective way, which is something that brings a lot of credibility with their customers and helps them whenever there is contract renewal,” he said.
During covid, Bradford acted as a partner with airport customers by helping to ensure that goods flew into terminals safely and without interruption, even as volumes fluctuated “wildly” and a lot of airport vendors struggled to provide consistent service.
“Bradford maintained staffing levels such that they were able to accommodate extraordinary requests from customers, and the financial strength of the company allowed them to be a flexible business partner to accommodate customers who were already dealing with a lot during this period,” he said.