Saudi PIF Completes Heathrow Stake Acquisition; Ardian Boosts Investment
In a significant financial manoeuvre, the Public Investment Fund (PIF) of Saudi Arabia has successfully concluded negotiations to procure a 10% stake in Heathrow Airport from Spanish infrastructure giant Ferrovial. Simultaneously, French private equity firm Ardian is poised to augment its share by an additional 15% in FGP Topco, Heathrow’s parent company. Ferrovial, a significant stakeholder since 2006, places the total value of this transaction at £2.37 billion ($3 billion), pending regulatory approval.
This marks the culmination of Ferrovial’s intricate involvement with the UK airport operator, initially holding a majority stake of 56% and gradually scaling down to 25% by 2013. FGP Topco boasts a roster of notable stakeholders, including the Qatar Investment Authority, Caisse de dépôt et placement du Québec, Singapore’s GIC, the Australian Retirement Trust, China Investment Corporation, and the Universities Superannuation Scheme.
Heathrow Airport, a key player in global aviation, has grappled with financial challenges in the current fiscal year. The primary contributors to this predicament include a substantial debt burden compounded by aggressive increases in borrowing costs. The financial strain intensified with the Civil Aviation Authority’s decision to reduce passenger charges. While Heathrow’s management sought an increase to over £40 per passenger, the regulatory authority has proposed a reduction to £25.43 by 2024, maintaining this rate until the conclusion of 2026.
The move by PIF to secure a significant stake in Heathrow aligns with the fund’s strategy of diversifying its investments. PIF, recognised as one of the world’s most dynamic sovereign wealth funds, boasts assets exceeding $700 billion and has recently ventured into various sectors, including sports such as football and golf.
However, this strategic financial move is not without its share of concerns. The PIF operates under the oversight of Saudi Arabia’s influential figure, Prince Mohammed bin Salman Al Saud. The Saudi government, led by the prince, has faced persistent allegations of human rights violations. Notably, US intelligence has implicated the prince in the 2018 killing of journalist Jamal Khashoggi. Despite these allegations, Prince Mohammed bin Salman Al Saud has been granted immunity in the United States and has received a formal invitation to visit the United Kingdom from the Saudi Arabian embassy.
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