- PIF acquires 10% Heathrow.
- Ferrovial, Ardian involved.
- Financial challenges, fare reductions.
The Public Investment Fund (PIF) of Saudi Arabia has agreed with the Spanish infrastructure behemoth Ferrovial to purchase a 10% stake in Heathrow Airport.
The private equity firm Ardian, based in France, will acquire an additional 15% of its parent company, FGP Topco.
Ferrovial, which has held a stake in the company since 2006, valued the transaction at $2.37 billion (£3 billion).
The firm asserts that regulatory conditions continue to govern the transaction.
Changes in Ownership Structure
The arrangement would end Ferrovial’s 56% holding in the UK airport operator, which had dropped to 25% by 2013.
Qatar Investment Authority, Caisse de dépôt et placement du Québec, Singapore’s GIC, Australian Retirement Trust, China Investment Corporation, and Universities Superannuation Scheme are additional FGP Topco stakeholders.
Due to its high debt and rising borrowing costs, the airport lost money this year.
The Civil Aviation Authority has also determined to reduce passenger fares allocated toward cargo systems, terminal runways, and security expenses.
Fare Reductions and Stakeholder Perspectives
The average fare per passenger at Heathrow is projected to decrease from £31.57 in 2023 to £25.43 in 2024 and then “remain essentially flat” through the conclusion of 2026, according to the regulator.
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Heathrow management wanted taxes to exceed £40, while airlines wanted £18.50.
PIF’s Role and Controversies
Due to its hydrocarbon wealth, the PIF of Saudi Arabia is one of the world’s most active sovereign wealth funds, with assets exceeding $700 billion. In recent times, the fund has made investments in golf and football.
Saudi Prince Mohammed bin Salman Al Saud, whose regime has been accused of human rights abuses, administers the fund.
US intelligence believes Prince Mohammed ordered the 2018 murder of Saudi journalist Jamal Khashoggi. However, the Saudi Arabian embassy reports that the prince has been granted immunity in the United States and has been extended an invitation to visit the United Kingdom.
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