Saudi PIF and Ardian to buy 25% stake in Heathrow airport for £2.4bn

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Saudi Arabia’s sovereign wealth fund is taking a £1bn stake in London’s Heathrow airport as the infrastructure group Ferrovial offloads shares in the UK travel hub it has owned for 17 years.

Ferrovial, which shifted its head office from Madrid to Amsterdam this year, late on Tuesday said it was selling its 25 per cent stake in the airport’s parent company for £2.4bn.

In the transaction, Saudi Arabia’s Public Investment Fund will acquire 10 per cent of the shares in the company and Ardian, one of Europe’s largest private equity groups, will purchase 15 per cent.

The deal marks the end of a chapter for Heathrow that began amid drama and controversy in 2006 when Ferrovial launched a successful hostile bid for BAA, the UK airports operator.

More recently Ferrovial executives had privately grown frustrated at the regulatory landscape after Heathrow was forced to cut its landing charges by almost a fifth following a bitter dispute with its airline customers.

The airport has remained lossmaking this year partly because of the higher cost of servicing its significant debt burden following rises in interest rates.

Luke Bugeja, chief executive of Ferrovial Airports, said the company had helped to transform Heathrow, “overseeing an investment of £12bn, expanding its capacity with the construction of Terminal 2, and improving its operational performance”.

The group’s initial Heathrow stake was 56 per cent but it had reduced it to 25 per cent by 2013.

PIF, which has more than $700bn in assets thanks to Saudi oil wealth, is one of the world’s most active sovereign wealth funds, investing in everything from electric-vehicle makers to gaming technology and golf.

Ardian is a leading player in infrastructure and has invested heavily in transportation assets including airports across Europe and high-speed rail lines in France.

Ferrovial said the Heathrow transaction was subject to regulatory approval and compliance with rights that may be exercised by the other owners of Heathrow’s parent company, FGP Topco.

Those owners include the Qatar Investment Authority, which has a 20 per cent stake, as well as Singapore’s GIC sovereign wealth fund and the Australian Retirement Trust, which each own 11.2 per cent.

Ferrovial said it remained committed to the UK and to its airport business, which accounts for about 30 per cent of its earnings before interest, tax, depreciation and amortisation.

It owns a 50 per cent share in the UK’s Aberdeen, Glasgow and Southampton airports and 60 per cent of Dalaman airport in Turkey. It also has a 49 per cent stake in Terminal 1 at New York’s JFK airport.

Ferrovial’s growth is increasingly driven by the US, where Rafael del Pino, its chair and chief executive, wants to list its shares in New York, a plan made possible by shifting its head office to the Netherlands.

Ferrovial’s large toll-road business, which eclipses the airports division in size, includes big investments in the US and Canada, as well as the UK, Ireland, Slovakia and Australia.

Del Pino, son of the company’s founder, owns a 20 per cent stake in Ferrovial worth more than €4bn, making him one of Spain’s richest people.