Could Saudi Arabia get control of London’s Heathrow Airport?

inerWill Saudi Arabia get control of London’s famed Heathrow Airport? In November, Saudi Arabia’s sovereign wealth fund announced it had struck a deal to buy a 10 per cent stake in UK’s largest airport. Now, there are reports that the airport’s largest investors are considering selling their pieces of the airport. The development comes as Saudi Arabia continues to diversity its portfolio by investing in a slew of assets worldwide under Prince Mohammed Bin Salman’s Vision 2030. But could the Kingdom end up owning Heathrow? What are its possible implications? Let’s take a closer look: Could the Kingdom end up owning Heathrow? It’s certainly possible. Spanish infrastructure giant Ferrovial, which has been the largest shareholder in Heathrow for more than two decades, declared it would be offloading its 25 per cent share, as per Yahoo.com. As per Simple Flying, Ferrovial has a 50 per cent stake in the UK’s Aberdeen, Glasgow, and Southampton airports, a 60 per cent share in Turkey’s Dalaman Airport and a 49 per cent share of Terminal 1 in New York’s John F Kennedy International Airport. Ferrovial, which has its headquarters in Madrid, last month struck a $3 billion deal to sell its entire stake in the airport to the  Public Investment Fund (PIF) headed up by MBS and Paris-based firm Ardian.

The PIF took a 10 per cent stake in Heathrow, while Ardian took a 15 per cent share.

As per The Guardian, while the PIF and Ardian will hold their stakes separately, the Kingdom is a a limited partner investor in Ardian’s infrastructure finances. As per The Times, the PIF and Ardian paid a 70 per cent premium over the deal’s valuation by Morgan Stanley. The sovereign wealth funds of Qatar, China, and Singapore also own a stake in Heathrow. They are unlikely to sell their shares in the airport. [caption id=“attachment_13396522” align=“alignnone” width=“640”] The development comes as Saudi Arabia continues to diversity its portfolio by investing in a slew of assets worldwide under Prince Mohammed Bin Salman’s Vision 2030. AP[/caption] However, pension funds of Quebec, Australia, and the UK’s Universities Superannuation Scheme (USS) – who also own pieces of Heathrow – may be considering doing so. As per Sunday Times, at least one other stakeholder is on the verge of selling their shares, while the others could do the same shortly. As per The Guardian, the other investors hold around 35 per cent of the stake in Heathrow. Selling at the same price, they would fetch around $11.9 billion. “At that price, we are a seller,” one unnamed head of an investor told the  newspaper. What are the possible implications? It’s far too early to say. But this possible development comes on the heels of the PIF making some big-ticket purchases in the UK and elsewhere around the world. The PIF already has around $700 billion in assets around the world. As per Yahoo.com, the PIF recently became the second largest stakeholder in Aston Marton.

In 2021, it bought Newcastle United.

It has taken over professional golf and is said to be interested in buying a share in the Indian Premiere League. As per The Guardian, Heathrow’s passenger numbers have shot through the roof post COVID. The airport made an adjusted loss of $859 million in 2022. That number was at $1.63 billion in 2021. Yahoo quoted Luke Bugeja, head of Ferrovial’s airports business, as saying, “Over the last 17 years, we have been contributing to Heathrow’s transformation, together with our fellow shareholders, achieving some excellent milestones throughout our long-term role as investor. We are very pleased to have made Heathrow one of the world’s most connected airports and the busiest airport in Europe.” With inputs from agencies