Saudi Investment Fund to Acquire 10% Stake in Heathrow Airport from Ferrovial

Saudi Arabia’s Public Investment Fund (PIF) has reached an agreement to purchase a 10% stake in Heathrow airport from Spanish infrastructure giant Ferrovial. Additionally, a 15% stake in Heathrow’s parent company, FGP Topco, will be acquired by France-based private equity fund Ardian.

Ferrovial, which has held a stake in Heathrow since 2006, has valued the deal at £2.37 billion ($3 billion). However, the transaction remains subject to regulatory conditions, as confirmed by the company.

If approved, this deal will mark the conclusion of Ferrovial’s investment in the UK airports’ operator, which initially held a 56% stake, subsequently reduced to 25% by 2013.

Notable stakeholders in FGP Topco include Qatar Investment Authority, Caisse de dépôt et placement du Québec, Singapore’s GIC, Australian Retirement Trust, China Investment Corporation, and Universities Superannuation Scheme.

Heathrow airport has faced financial challenges this year, primarily due to its substantial debt, impacted by significant increases in borrowing costs. Furthermore, the Civil Aviation Authority has decided to reduce passenger charges, which contribute to the expenses associated with terminals, runways, baggage systems, and security.

The average charge per passenger at Heathrow for 2023 currently stands at £31.57. The regulator has announced that this figure will decrease to £25.43 in 2024 and is expected to “remain broadly flat” until the end of 2026.

It is worth noting that Heathrow’s management had sought an increase in charges to over £40, while airlines had proposed that they should not exceed approximately £18.50.

Saudi Arabia’s Public Investment Fund (PIF) is a prominent sovereign wealth fund with assets exceeding $700 billion, primarily sourced from the country’s oil wealth. In recent years, PIF has diversified its investments into various sectors, including sports such as football and golf.

However, it is important to acknowledge that PIF is under the control of Saudi Arabia’s Crown Prince, Mohammed bin Salman Al Saud, whose government has faced allegations of multiple human rights violations. U.S. intelligence agencies have stated their belief that Prince Mohammed ordered the killing of U.S.-based journalist Jamal Khashoggi in 2018, although he has received immunity in the U.S. and has been invited to visit the UK, as indicated by the Saudi Arabian embassy.

Sources: AirGuide Business airguide.info, bing.com, bbc.com