Saudi Arabia likely to take control of Heathrow
Saudi Arabia is likely to seize majority control of Heathrow as several shareholders are on the verge of accepting a lucrative offer from a consortium led by Saudi Arabia. Its Public Investment Fund (PIF) and investment firm Ardian, in which Saudi Arabia is an investor, struck a deal to buy Ferrovial’s 25% stake last month for £2.4 billion. Now, at least one other shareholder is close to selling, while other investors are expected to follow suit, tempted by what is seen as an unusually high price from the Saudis. Under Heathrow’s shareholder agreement, the other shareholders have the right to make the Saudi consortium buy their shares at the same valuation as the Ferrovial deal – which values Heathrow at £9.6 billion. This is more than double the £4.5 billion implied value of the airport’s equity last time a big stake was sold in 2013, to USS. If the smaller Heathrow shareholders sell their share to the PIF Saudi consortium,it could mean that it holds almost 60% of Heathrow, with the rest remaining with sovereign wealth funds of China, Qatar and Singapore, which might opt to hold onto their stakes.
.
Tweet
Saudi Arabia set to take control of Heathrow
Shareholders ‘prepare to welcome’ bids valuing airport at a bumper £9.5bn
by Oliver Gill and John Arlidge (The Sunday Times)
December 09 2023,
Several Heathrow shareholders are on the verge of accepting an offer from a consortium led by Saudi Arabia’s sovereign wealth fund
Saudi Arabia is poised to seize majority control of Heathrow as several shareholders are on the verge of accepting a lucrative offer from a consortium led by the oil-rich nation.
The country’s Public Investment Fund and investment firm Ardian, in which Saudi Arabia is an investor, struck a deal to buy Ferrovial’s 25% stake last month for £2.4 billion.
Now, at least one other shareholder is close to selling, while other investors are expected to follow suit, tempted by what is seen as an unusually high price from the Saudis. “At that price, we are a seller,” said the head of one shareholder.
Saudi Arabia’s likely control of a crucial piece of the UK infrastructure comes amid concerns about the growing influence of Middle East investors over key British assets.
The government has launched an investigation into the takeover of the Telegraph and Spectator titles by an Abu Dhabi-backed bid.
And Saudi’s PIF has faced scrutiny over its acquisition of Premier League football club Newcastle United and move to take control of professional golf by merging its LIV Golf with PGA Tour.
Sources close to the PIF consortium this weekend sought to play down the Saudi influence in the bid. They pointed out that PIF and Ardian held stakes separately and that they would be managed independently of each other — but they conceded that PIF is also a limited partner investor in Ardian’s funds.
Heathrow’s remaining shareholders are sovereign wealth funds from Qatar, China and Singapore, as well as pension funds from Quebec, Australia and the UK’s Universities Superannuation Scheme (USS).
Under Heathrow’s shareholder agreement, these shareholders have the right to make the Saudi consortium buy their shares at the same valuation as the Ferrovial deal.
The Ferrovial transaction values Heathrow at £9.6 billion. This is more than double the £4.5 billion implied value of the airport’s equity last time a big stake was sold in 2013, to USS.
When the Ferrovial stake is sold, the Saudi-Ardian team will hold 25 per cent against the Qatar Investment Authority’s 20 per cent, Canadian pension fund Caisse de dépôt et Placement du Québec’s 12.62 per cent, Singapore sovereign wealth fund GIC’s 11.2 per cent, the Australian Retirement Trust’s 11.18 per cent, and the China Investment Corporation and Universities Superannuation Scheme’s 10 per cent each.
Industry figures said that while the sovereign wealth funds of China, Qatar and Singapore might opt to hold onto their stakes, the other investors were likely to sell. This would result in the Saudi consortium holding nearly 60 per cent of the airport.
Sources close to Qatar said it was unlikely to sell its stake. PIF and Ardian, CDQP and USS declined to comment. GIC and CIC did not respond to requests for comment, while QIA and the Australian Retirement Trust could not be reached.
https://www.thetimes.co.uk/article/saudi-arabia-set-to-take-control-of-heathrow-bg2pl3c29
.
See earlier:
Ferrovial to sell its 25% stake in Heathrow for $3 billion to Ardian (15%) and Saudi Arabia’s PIF (10%)
Infrastructure giant Ferrovial has reached an agreement with two different buyers to sell its entire 25% stake in Britain’s busiest airport, Heathrow, for £2.37 billion ($3.01 billion) the company said in a statement on Tuesday. Ferrovial said the buyers for the stake in FGP Topco – the parent company of Heathrow Airport Holdings Ltd – were private equity fund Ardian and Saudi Arabia’s Public Investment Fund (PIF). Ardian would acquire a 15% stake and PIF a 10% stake. The transaction is subject to regulatory conditions and must comply with the right of first offer and full tag-along rights, which may be exercised by the other FGP Topco shareholders, Ferrovial added. Ferrovial expects to complete the sale by mid-2024. Ferrovial also has a 50% stake in three other British hubs: Aberdeen, Glasgow and Southampton. It also has a 49% stake in the new Terminal One at New York City’s JFK airport.
Click here to view full story…
.
.
.