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Could Saudi Arabia be set for majority control of Heathrow?

By:

Transport Reporter

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In an interview with CityAM in November, Virgin Atlantic chief Shai Weiss described the ETA as “short-sighted.”
In an interview with CityAM in November, Virgin Atlantic chief Shai Weiss described the ETA as “short-sighted.”

Saudi Arabia could take majority control of Heathrow airport, as shareholders moot an offer from a consortium of investors led by the country.

The nation’s Public Investment Fund (PIF), alongside the Saudi-backed asset management firm Ardian, have signed a lucrative £2.4bn deal to snap up the Spanish infrastructure group Ferrovial’s 25 per cent stake.

According to reports in the Sunday Times, at least one other shareholder is now close to selling, with more expected to follow soon after. “At that price, we are a seller,” the head of one shareholder said.

Heathrow’s shareholder agreement means investors, such as international pension funds, can sell in line with the airport’s £9.5bn asking price.

Heathrow and the PIF consortium did not respond to a CityAM request for comment. Ardian declined to comment when approached. Sources close to PIF, cited by the Sunday Times, played down the influence of Saudi Arabia in the deal, arguing that PIF and Ardian hold stakes separately, which would be managed independently.

Separate investors in Heathrow’s parent company are led by the Qatar Investment Authority, alongside five other shareholders, which include the sovereign wealth funds of China and Singapore, who own around 11 per cent.

Pension funds including the Australian Retirement Trust, China’s Investment Corporation and Canada’s Caisse de dépôt also hold investments in the group.

The Saudi-run PIF owns more than £551bn in assets. Recent investments include a deal to buy Newcastle United and a shock merger deal between LIV golf, DP World and the PGA Tour.

Should the Saudi’s take majority control of Heathrow, there will likely be uproar from human rights groups amid fears over the increasing involvement of Middle-Eastern states in British assets.

The government has intervened in the proposed sale of the Telegraph to an Abu Dhabi backed firm, which has been referred to the Competition and Markets Authority (CMA) and the media regulator Ofcom.

Soaring passenger numbers pushed Heathrow close to the green in its most recent financial results, following years of lossmaking. The West-London hub has struggled for years under a near-£16bn debt pile, worsened by a chequered recovery from the pandemic, which decimated the entire industry’s finances.