Saudi Arabia will acquire a 10% stake in the holding company of Heathrow Airport through its government-owned sovereign wealth fund, the Public Investment Fund, in a deal valued at nearly £950 million.
The Saudis will acquire its stake in the West London airport from Spanish construction company Ferrovial which has decided to offload its entire investment in Heathrow.
Ferrovial currently owns a 25% stake in Heathrow through the FGP TopCo holding company, and the remaining stake will be sold to global private investment house Ardian, which already holds a small stake in the airport.
In a statement, Ferrovial said the total value of the deal was worth £2.3 billion.
The Saudi sovereign investment fund said it was “pleased to be investing in Heathrow, a world-class airport, which acts as a key gateway to the world. PIF’s investment in Heathrow is in line with its strategy to support the business as a long-term partner.”
The deal is likely to prove controversial, and critics will raise concerns about the UK selling off key infrastructure to foreign governments, especially Saudi Arabia, where significant human rights persist.
Several other countries, however, already hold stakes in the airport, including Qatar through the Qatar Investment Authority and China through the China Investment Corporation. Singapore also holds a stake through its Government Investment Corporation.
Back in 2006, Ferrovial became Heathrow’s largest shareholder after it acquired a 55% stake in the airport in the hopes that the airport would have its bid for a third runway approved, leading to a massive building boom for the company.
The third runway decision, however, remains a long way off, and while Ferrovial constructed the airport’s new Terminal 2, further construction work has been put on hold.
Last year, Ferrovial was rumoured to be in talks to sell off its remaining shareholding in Heathrow Airport.
