Passengers wait for their flights at Heathrow Airport's Terminal 5 in west London, on September 13, 2019. (Photo by Tolga Akmen / AFP)
Saudi Arabia’s Public Investment Fund will buy a 10% stake in London Heathrow Airport as part of a shareholder reshuffle, becoming a partial owner in one of Europe’s busiest airports.
The fund is buying the stake as Spain’s Ferrovial sells down its 25% holding. The remaining 15% held by the infrastructure firm will go to Ardian, a Paris-based private equity firm, according to a statement late Tuesday. For Ferrovial, the deal represents a £2.37 billion ($3 billion) windfall for an asset it had previously valued at zero.
Ferrovial, whose airport interests span the UK, Turkey and a stake in one terminal at New York’s John F. Kennedy, said earlier this month it would consider a sale of its holding in London Heathrow. Air traffic has rebounded after being decimated during the Covid-19 pandemic, helping Heathrow to narrow its losses over the first nine months of this year.
The Spanish company’s exit ends almost two decades of ownership in the UK airport. It bought a majority in the airport operator, then called BAA Plc, for $18.8 billion in 2006, eventually reducing its stake to the now 25%.
PIF said the purchase is "in line with its strategy to support the business as a long-term partner, calling Heathrow a "world-class airport.”
Saudi Arabia is in the process of expanding its airline industry, seeking to attract more business and tourism to the country. It recently created Riyadh Air, a new airline that will operate in addition to existing flag carrier Saudia.
The Heathrow deal is subject to approvals, as well as the rights of existing shareholders to join the transaction as sellers or buyers under a prior shareholder agreement.
