Saudi Arabia could take ‘effective majority control’ of Heathrow airport

Saudi Arabia could take effective majority control of London Heathrow with other investors considering selling their stakes, according to reports.

The Public Investment Fund (PIF) – Saudi Arabia’s sovereign wealth fund – and the Saudi-backed asset management firm Ardian have signed a £2.4b deal for Ferrovial’s 25 per cent stake in the airport. The Spanish infrastructure giant had been the primary owner of Heathrow for 17 years.

According to The Sunday Times, one other shareholder is now close to selling, with more likely to follow suit, which could see the nation eventually gain majority control of the UK’s biggest airport.

Under the terms of the airport’s shareholder agreement, other investors – including international pension funds with total holdings approaching 35 per cent – are entitled to sell at the same price, which values Heathrow at about £9.5b.

In November, the PIF announced it had entered into a share purchase agreement to acquire a 10 per cent stake in FGP TopCo, the holding company of Heathrow Airport Holdings, from Ferrovial.

Under the terms of the agreement, the PIF will acquire 10 per cent in TopCo, and Ardian will acquire 15 per cent through its infrastructure funds through “separate vehicles”.

The PIF said it was “pleased to be investing in Heathrow, a world-class airport, which acts as a key gateway to the world” and that its “investment in Heathrow is in line with its strategy to support the business as a long-term partner”.

David Simmonds, co-chair of the UK’s airport communities all-party parliamentary group said: “[I am] relieved that Heathrow, despite the impact of the pandemic, continues to attract interest from international investors.

“Sovereign wealth funds have been key to the airport’s success and I am not surprised that Saudi Arabia’s Public Investment Fund forms part of this consortium. Heathrow stands at a pivotal moment in its development as it looks to recoup money lost over the last few years.”

The airport did not wish to make a comment when approached by ARGS.