Major Stake Sale Underway at London Heathrow as Ferrovial and Other Shareholders Move to Divest

London Heathrow Airport (LHR), the UK’s largest and most prominent airport, is witnessing a significant shift in its ownership structure. More than a third of the shareholders, including the majority owner, Spanish infrastructure specialist Ferrovial, are planning to divest their stakes in the airport.

Ferrovial has initiated the process by agreeing to sell a 15% stake in FGP Topco, Heathrow’s parent company, to French private equity firm Ardian, and an additional 10% to Saudi Arabia’s Public Investment Fund (PIF). This move represents a complete divestiture of its holdings in a deal valued at £2.4 billion ($3 billion).

In line with the “tag-along process” included in the deal, other FGP Topco shareholders are following suit, exercising their rights to sell their shares. Collectively, these shareholders represent 35% of FGP Topco’s share capital, effectively putting 60% of LHR up for sale.

A pivotal aspect of Ferrovial’s sale is the mandatory sale of these “tagged” shares. Consequently, either Ardian or PIF must increase their bid to encompass these additional stakes or seek other investors to purchase them.

Ferrovial confirmed in a statement, “The agreement for the sale and purchase of our shares in FGP Topco remains active. However, the successful completion of the deal is contingent upon the sale of the tagged shares. We are actively exploring various options to meet this condition.”

The finalization of this transaction now depends on the resolution of the tag-along condition, leaving some uncertainty regarding the deal’s completion.

Ferrovial has been a stakeholder in LHR since 2006, initially acquiring BAA as part of a consortium after an intense takeover battle. FGP Topco’s current shareholders include a range of global investors like Qatar Investment Authority, Caisse de dépôt et placement du Québec, Singapore-based GIC, Australian Retirement Trust, China Investment Corporation, and Universities Superannuation Scheme.

In November 2023, Ardian highlighted that its acquisition strategy aligns with its focus on major infrastructure investments in its core markets. Ardian had previously held a 49% stake in London Luton Airport from 2013 to 2018.

Saudi Arabia’s PIF, managing one of the world’s largest sovereign wealth funds and controlled by Crown Prince Mohammed bin Salman, stated that its investment in LHR aligns with its long-term partnership strategy.

LHR’s operational performance remains robust, having handled over 6.6 million passengers in December 2023, marking the airport’s busiest December on record. The total passenger count for 2023 reached 79 million, with transatlantic travel, especially to and from North America, being a significant contributor. New York John F. Kennedy Airport emerged as LHR’s top destination in 2023, attracting over three million passengers.