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 alongside the Qatar Investment Authority.
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 a holding it had previously valued at zero.
The Public Investment Fund, better known as the PIF, has become a major investing force around the world as Saudi Crown Prince Mohammed bin Salman, Saudi Arabia’s de-facto leader, reshapes the oil-rich country with his own brand of state capitalism. The fund, part of a consortium that bought Vodafone Group Plc’s towers unit in 2022, aims to reach $2 trillion in assets by 2030. That would make PIF the world’s biggest wealth fund, a title now held by Norway’s oil fund.
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.
Still, the Spanish company remains burdened with more than £14 billion of debt. Ardian and the Saudi public fund would join existing owners including Qatar, which holds 20%, and smaller investors Caisse de dépôt et placement du Québec, Singapore’s GIC sovereign wealth fund, and Alinda Capital Partners of the US. Each has a stake below 13%.
Heathrow is a major destination for flights from the Gulf region, with Emirates, Qatar Airways and Etihad Airways PJSC all serving the hub with multiple flights a day. 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.
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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.
Ferrovial said it remains committed to advancing its airport business. It owns a 50% share in Aberdeen, Glasgow and Southampton airports in the UK, 60% of Dalaman Airport in Turkey and 49% of JFK’s New Terminal One.
--With assistance from Matthew Martin.
(Updates with more details on PIF investment strategy)
