Saudi wealth fund takes 10% stake in Heathrow airport

Saudi wealth fund takes 10% stake in Heathrow airport

29 Nov    Finance News, News

Saudi Arabia’s sovereign wealth fund has taken a 10% stake in Heathrow for £1bn from the Spanish infrastructure company Ferrovial, which is selling off its holding in Europe’s biggest airport after 17 years.

Ferrovial has sold its entire 25% stake in Heathrow’s parent company, FGP Topco, for £2.4bn, with a 15% share of the firm going to the French private equity group Ardian and the rest going to the Saudi Public Investment Fund (PIF).

If the deals by regulators are approved it will end Ferrovial’s investment in Heathrow, which started at 56% in 2006 but was reduced to 25% by 2013.

“Over the last 17 years, we have been contributing to Heathrow’s transformation, together with our fellow shareholders, achieving some excellent milestones throughout our long-term role as investor,” said Luke Bugeja, the head of Ferrovial’s airports business.

“We are very pleased to have made Heathrow one of the world’s most connected airports and the busiest airport in Europe.”

Other investors in Heathrow’s parent company include the Qatar Investment Authority, which has a 20% stake, Caisse de dépôt et placement du Quebec, Singapore’s GIC sovereign wealth fund, the Australian Retirement Trust, China Investment Corporation and Universities Superannuation Scheme.

Ferrovial said it remained committed to the UK and its other airport investments.

The company owns half of Aberdeen, Glasgow and Southampton airports. It also owns a 49% stake in Terminal 1 at New York’s JFK airport and holds a 60% investment in Dalaman airport in Turkey.

PIF is one of the world’s most active sovereign wealth funds, with more than $700bn (£551bn) in assets because of its oil wealth, and has recently been investing in sport such as football and golf. The fund is controlled by Saudi Arabia’s crown prince, Mohammed bin Salman, whose government has been accused of numerous human rights violations.

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While passenger numbers at Heathrow trebled in 2022, the airport made an adjusted loss of £684m compared with a loss of about £1.3bn the previous year. It forecasts it will reach 83% of 2019 passenger levels this year.

In September, the competition regulator rejected an appeal submitted by Heathrow against a ruling by the Civil Aviation Authority forcing it to cut passenger charges by almost a fifth next year.

The average charge per passenger at Heathrow for 2023 is £31.57 but the regulator said this would fall to £25.43 in 2024 and “remain broadly flat” until the end of 2026.

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