Sunday, February 25

Saudi’s PIF Acquires 10% Stake in Heathrow Airport

Saudi Arabia’s Public Investment Fund (PIF) has finalized an agreement to acquire a 10% share in Heathrow airport from Ferrovial, a Spanish infrastructure company. Concurrently, France-based private equity fund Ardian will purchase an additional 15% stake in FGP Topco, the airport’s parent company.

Ferrovial, an investor in Heathrow since 2006, confirmed the transaction’s value at £2.37 billion ($3 billion). However, the deal’s completion is contingent upon regulatory approvals.

This acquisition marks Ferrovial’s divestment from the UK airports’ operator, with its initial ownership of 56% in 2006 eventually reducing to 25% by 2013. Notably, other stakeholders in FGP Topco encompass Qatar Investment Authority, Caisse de dépôt et placement du Québec, Singapore’s GIC, Australian Retirement Trust, China Investment Corporation, and Universities Superannuation Scheme.

Heathrow has encountered financial challenges this year primarily due to its substantial debt, impacted by considerable increases in borrowing costs. Additionally, the Civil Aviation Authority has opted to reduce passenger charges that contribute to terminal operations, runway maintenance, baggage systems, and security.

While the average fee per passenger at Heathrow in 2023 stands at £31.57, the regulator projects a reduction to £25.43 in 2024, maintaining relative stability until late 2026. Notably, Heathrow sought an increase in charges to over £40, whereas airlines advocated for a cap at roughly £18.50.

PIF, a prominent sovereign wealth fund managing over $700 billion in assets derived from oil wealth, has expanded its portfolio into various sectors, including sports like football and golf. However, its association with Saudi Arabia’s Prince Mohammed bin Salman Al Saud, whose administration faces allegations of human rights abuses, raises concerns.

US intelligence has implicated Prince Mohammed in the 2018 killing of US-based journalist Jamal Khashoggi, though he’s granted immunity in the US and reportedly invited to the UK by the Saudi Arabian embassy.

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