PIF set to grab 10% stake in Heathrow

PIF set to grab 10% stake in lossmaking Heathrow airport: The Public Investment Fund is set to grab a 10% stake in London’s Heathrow airport as Spanish infrastructure company Ferrovial looks to offload stakes in the one of Europe’s busiest travel hubs that it has owned for nearly two decades. The PIF announced the transaction yesterday after news of it leaked the night before.

What we know: Ferrovial said it will be selling its entire 25% stake in FGP Topco, the airport’s parent company, for GBP 2.4 bn, according to a statement. It named the buyers as the PIF, which will be acquiring a 10% stake, and Paris-based equity firm Ardian which will be acquiring a 15% stake through separate vehicles, it said.

There are caveats, of course: Other shareholders have the right of first offer and could preempt the PIF, the fund said, and the transaction needs regulatory approval.

Ferrovial has been divesting bits and pieces: The Spanish company had an initial stake of 56% in Heathrow but had sold down to 25% by 2013. Aside from Heathrow, it owns a 50% stake in UK’s Aberdeen, Glasgow and Southampton airports. Further afield, it has stakes in facilities in Turkey and 49% of in New York JFK airport’s Terminal 1.

Heathrow had it coming: Ferrovial executives have reportedly been dissatisfied at the British regulatory scene after Heathrow was obliged to slash its landing charges by almost a fifth on the back of conflict with airliners, according to The Financial Times. The airport continues to be lossmaking this year on the back of a higher cost of servicing for its significant debt burden due to rising interest rates. It continues to turn in losses despite a recovery in passenger numbers to levels reported before the covid pandemic. The busy travel hub received 59.4 mn passengers in the first nine months of the year, up from 34.4% last year.

REMEMBER- We’ve been on an investments spree for prized assets: The PIF has been emerging as one of the most active sovereign wealth funds globally, grabbing multiple stakes in everything from golf to mixed martial arts to EV production among other ventures.

Other shareholders: FGP Topco counts Qatar’s investment authority (20%) alongside funds and other investors from Canada (12.6%), Australia (11.2%), China (10%), and other countries.