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(Bloomberg) — Saudi Arabia’s Public Investment Fund will buy a 10% stake in London’s Heathrow Airport in a shareholding reorganization, partially owning one of Europe’s busiest airports along with the Qatar Investment Authority.
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The fund bought this stake while Spain’s Ferrovial sold its 25% stake. The remaining 15% held by the infrastructure company will go to Ardian, a Paris-based private equity firm, according to a Tuesday night. For Ferrovial, the deal represents a provision of 2. 37 billion pounds ($3 billion) for an asset it had previously valued at zero.
The Public Investment Fund, better known as PIF, has a major investment force around the world as Crown Prince Mohammed bin Salman, Saudi Arabia’s de facto ruler, reshapes the wealth-rich country. oil with its own form of state capitalism. The fund, part of a consortium that bought Vodafone Group Plc’s tower unit in 2022, aims to reach $2 trillion in assets by 2030. That would make PIF the world’s largest wealth fund, a name now held by the Norwegian oil fund.
Ferrovial, whose airport interests span the United Kingdom, Turkey and a stake in a terminal at John F. Kennedy in New York, announced earlier this month that it would sell its stake in London’s Heathrow airport. Air traffic has recovered after being decimated during the Covid-19 pandemic, helping Heathrow reduce losses in the first nine months of this year.
The departure of the Spanish company puts an end to almost two decades of ownership of the British airport. It acquired a majority stake in the airport operator, then called BAA Plc, for $18. 8 billion in 2006, cutting its stake to 25% today.
Long-term partner
Ardian and the Saudi state fund would join existing owners, adding Qatar, which owns 20%, and smaller investors, the Caisse de dépôt et position du Québec, Singapore’s GIC sovereign wealth fund and U. S. -based Alinda Capital Partners. It has a stake of less than 13%.
Ferrovial rose 3. 2% to 31. 94 euros in Spanish trade. Analysts at Citigroup Global Markets said the planned divestment is positive for the infrastructure company “as proceeds from the money are expected to reduce net debt and any potential dividend distributions to shareholders. “
Read more: How the Saudi Wealth Fund Will Build a Post-Oil Future: QuickTake
PIF said the acquisition was “in line with its corporate strategy as a long-term partner, calling Heathrow a ‘world-class airport’.
Although the UK airport remains a major global gateway, its expansion customers have been hampered by a lack of progress on a third runway, restricting Heathrow’s capacity, while destinations such as Turkey, Qatar and Dubai are aggressively expanding their airports, operating them 24 hours a day. One day.
Things of Value
In the UK, PIF also owns the Newcastle United FC football club, as part of a wider effort to invest in sports assets. The U. K. is an attractive market for Gulf investors: Qatar has a stake in British Airways’ parent company, IAG SA, as well as prominent assets such as the Harrods decomposition store in London and a collection of luxury hotels. luxury. PIF owns a stake in Aston Martin, the British automaker known as James Bond’s vehicle of choice.
A ruling last month by Britain’s festival watchdog on landing fees also left airlines and Heathrow dissatisfied: while the airlines sought to have fees reduced, Heathrow Airport sought to charge higher fees.
Heathrow is a top destination for flights from the Gulf region, with Emirates, Qatar Airways and Etihad Airways PJSC operating in the hub with arrivals consistent with the day. Saudi Arabia is in the process of developing its airline industry, looking to attract more business. and tourism to the country. It recently created Riyadh Air, a new airline that will operate as a complement to the existing national airline Saudia.
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Heathrow’s deal is subject to approvals, as well as the rights of existing shareholders to register in the transaction as distributors or purchasers under a prior shareholders’ agreement.
Ferrovial remains committed to advancing its airport business. It owns 50% of Aberdeen, Glasgow and Southampton airports in the UK, 60% of Dalaman Airport in Turkey and 49% of the new JFK Terminal 1.
–With those of Mateo Martín and Clara Hernanz Lizárraga.
(Updates with UK investments in the tenth paragraph).
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