RIYADH/LONDON (Web Desk) – Saudi Arabia's Public Investment Fund (PIF) has struck a share purchase agreement to buy a 10 per cent stake in FGP Topco Limited, the holding company of Heathrow Airport Holdings Ltd, from Ferrovial, state news agency (SPA) reported on Wednesday.
“The transaction is subject to complying with ROFO (Right of First Offer) and full tag-along rights which may be exercised by the other Topco shareholders pursuant to the Shareholders’ Agreement and the Articles of Association of the company, in addition to satisfaction of applicable regulatory conditions,” the SPA added.
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It said that the PIF 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.”
Heathrow Airport, now known as London Heathrow, is one of Europe’s busiest airports. The shareholders in Topco also include the Qatar Investment Authority with a 20pc stake.
Other investors with less than 13pc stake include Caisse de dépôt et placement du Québec, Singapore’s GIC sovereign wealth fund, Alinda Capital Partners of the US, Australian Retirement Trust, China Investment Corporation and Universities Superannuation Scheme.
The move comes as Spain’s Ferrovial decided to sell its 25pc holding, which means the remaining 15pc will go to Ardian, a Paris-based private equity firm. However, the deal represents a $3 billion windfall for a holding it had previously valued at zero.
Ferrovial has owned a stake since 2006, but the deal, if approved by the regulators, would end its investment in the UK airports' operator which started at 56pc but was reduced to 25pc by 2013.
The PIF is a major investing force around the world as Crown Prince Mohammed bin Salman is aiming at diversification of economy to reduce reliance on oil. It aims to reach $2 trillion in assets by 2030, making it the biggest wealth fund, racing ahead of its counterpart from Norway.
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Currently, the PIF has more than $700bn in assets thanks to its oil wealth, which has recently been investing in sports such as football and golf.
Heathrow is a major destination for flights from the Gulf States, with Emirates, Qatar Airways and Etihad Airways, 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.