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Saudi Arabia acquires stake in Heathrow in £3.26 billion deal
Saudi Arabia has secured a 15% stake in Heathrow Airport as part of a £3.3 billion investment alongside French private equity giant Ardian.
The oil-rich country’s Public Investment Fund (PIF), chaired by Crown Prince Mohammed bin Salman, has targeted the purchase since 2022 as part of an effort to diversify the economy.
PIF and Ardian announced the purchase of a 25% stake in Heathrow from Spanish construction company Ferrovial in November. They later said they were in talks with other investors to increase their stake to 60%, raising the prospect of the Saudis taking control of a key UK asset.
In this case, they will have a combined stake of just under 38%, with Ardian becoming the largest individual shareholder and PIF occupying third place, behind the Qatar Investment Authority, which opposed the reduction of its 20% stake. %.
A source close to the transaction said that, based on this, it was not expected to raise significant national security or competition concerns.
Ardian, which will have a 22.6% stake, said it is committed to investing in the UK and will support Heathrow in its efforts to reduce carbon emissions, increase revenue and withstand external shocks. It did not comment on long-delayed plans to build a third runway at the airport, which operates close to capacity.
It is understood that, like Qatar, sovereign wealth funds in China and Singapore also chose to retain their entire stakes, as did the Australian Retirement Trust.
Only two investors – the Canadian institutional investor Caisse de dépôt et placement du Quebec (CDPQ) and the Universities Superannuation Scheme (USS) from the United Kingdom – have chosen to exploit the so-called tag-along rights that allow them to sell at the same price as Ferrovial .
The Spanish infrastructure giant, main owner of Heathrow for 17 years, has also backed off its plan to exit its holding company entirely and, together with CDPQ and USS, will control around 10% of the company.
The purchase by Ardian and PIF values Heathrow at around £8.3 billion, compared with the £9.5 billion valuation based on the original deal in November. This reflects the increased transaction size, the source said.
Saudi Arabia has become a major investment force around the world as it seeks to prepare for a post-fossil fuel economy and aims to hold $2 billion (£1.6 billion) in assets by 2030.
Its most prominent investments were in sport, with the purchase of the Newcastle United football club and the establishment of the revel LIV golf tour.
The UK has been more relaxed about investing in the Middle East than some other countries. Dubai-based DP World has ports in the UK and Qatar Airways is a major investor in British Airways parent IAG, although the UAE’s takeover of The Telegraph has been blocked.
Heathrow expects to attract 82.4 million passengers in 2024, beating the record of 80.9 million set in 2019.
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