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.
Read More. A Saudi Airline Embraces Luxury to Challenge Emirates and Qatar
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)