The largest shareholder in Heathrow is selling its 25 per cent stake in the London airport to investors from Saudi Arabia and France.
Saudi Arabia’s Public Investment Fund (PIF) will buy 10 per cent of Heathrow from Ferrovial of Spain, while Paris-based Ardian will acquire a 15 per cent slice in a deal worth £2.37 billion ($3 billion).
Ferrovial had indicated earlier this month that it was considering selling its shareholdings in FGP Topco, the company that owns Heathrow.
The Spanish company also owns 50 per cent stakes in Aberdeen, Glasgow and Southampton airports in the UK, 60 per cent of Dalaman Airport in Turkey and 49 per cent of JFK’s New Terminal One.
“Over the last 17 years, we have been contributing to Heathrow’s transformation, together with our fellow shareholders, achieving some excellent milestones throughout our long-term role as investor," Luke Bugeja, chief executive of Ferrovial Airports said.
"These include overseeing an investment of £12 billion, expanding its capacity with the construction of Terminal 2, and improving its operational performance.
"We are very pleased to have made Heathrow one of the world’s most connected airports and the busiest airport in Europe.”
Analysts feel Ferrovial may be taking the opportunity to reduce its own debt at a time when interest rates are high.
"Ferrovial still has a lot of debt so a chance to pay down some of that debt may be welcome at a time when interest rates stand at multi-year highs and central banks are, for now at least, threatening to keep them there for some time," Russ Mould, investment director at AJ Bell, told The National.
"Ferrovial owned a 25 per cent stake in Heathrow before the deal, whereas it fully owns a lot of its other assets, notably toll roads in the USA. Note also that the UK, including stakes in other airports, comes to just 6 per cent of group asset value and the US and Canada seem to be higher strategic priorities," he added.
Internationally-owned airport
Saudi Arabia's PIF has investments in several British companies, including Newcastle United Football Club and the car manufacturers Aston Martin and McLaren.
"This is just a pure investment play by the Saudi PIF into one of the world's most attractive airport assets, where demand is almost guaranteed in future years." John Gant at the aviation data and analytics company OAG told The National.
The PIF joins another Gulf sovereign wealth fund, the Qatar Investment Authority, as a part owner of Heathrow's parent company FGP Topco.
The Qatar Investment Authority holds a 20 per cent slice of what is one of the world's busiest airports.
Smaller investors include Caisse de depot et placement du Quebec, Singapore’s GIC sovereign wealth fund and the China Investment Corporation.
The completion of the deal is subject to regulatory approval.
Traffic numbers take off
Traffic numbers at Heathrow have bounced back since the pandemic and the airport significantly narrowed its losses in the first nine months of this year to £19 million from £442 million in the same period in 2022, but is still saddled with debts of more than £14 billion.
Last month, seven million passengers travelled through Heathrow, up 19 per cent on the same month last year.
The London airport's passenger numbers have been improving over the course of the year – 59.4 million passengers passed through Heathrow's terminals between the start of January and the end of September, compared with 44.2 million in the same period in 2022.
Last month a ruling on passenger landing fees by the UK's competition watchdog drew dissatisfaction from Heathrow and its airline clients. While the airlines wanted the charges lowered, Heathrow argued that they should be higher.
Nonetheless, demand for air travel is expected to increase in the post-pandemic era and Heathrow was recently ranked as the best-connected airport in the world by OAG.
"It’s all about long-term demand and supply within the total London market," Mr Gant told The National.
"For nearly every international airline in the world, Heathrow is the place to be with a better mix of traffic and potential connectivity."
Nonetheless, some analysts feel Heathrow is not without its problems and the airport's new stakeholders will have to weather them.
"Given high inflation and painful interest rates deployed to bring it down, financing costs of its big debt pile have increased significantly," Susannah Streeter, head of money and markets at Hargreaves Lansdown told The National.
"It’s also been hit by lower revenues at retail outlets at its terminals, partly because of the so-called ‘tourist tax’, meaning visitors can’t claim back VAT.
"With inflation likely to remain stubborn and high interest rates likely to settle in for a sustained period, it seems PIF and Ardian should be prepared to ride out some more turbulence ahead.’’
Decades of flight: Heathrow through the years - in pictures
Temple numbers
Expected completion: 2022
Height: 24 meters
Ground floor banquet hall: 370 square metres to accommodate about 750 people
Ground floor multipurpose hall: 92 square metres for up to 200 people
First floor main Prayer Hall: 465 square metres to hold 1,500 people at a time
First floor terrace areas: 2,30 square metres
Temple will be spread over 6,900 square metres
Structure includes two basements, ground and first floor
Game Of Thrones Season Seven: A Bluffers Guide
Want to sound on message about the biggest show on television without actually watching it? Best not to get locked into the labyrinthine tales of revenge and royalty: as Isaac Hempstead Wright put it, all you really need to know from now on is that there’s going to be a huge fight between humans and the armies of undead White Walkers.
The season ended with a dragon captured by the Night King blowing apart the huge wall of ice that separates the human world from its less appealing counterpart. Not that some of the humans in Westeros have been particularly appealing, either.
Anyway, the White Walkers are now free to cause any kind of havoc they wish, and as Liam Cunningham told us: “Westeros may be zombie land after the Night King has finished.” If the various human factions don’t put aside their differences in season 8, we could be looking at The Walking Dead: The Medieval Years.
Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
Zayed Sustainability Prize
MOTHER%20OF%20STRANGERS
%3Cp%3EAuthor%3A%20Suad%20Amiry%3Cbr%3EPublisher%3A%20Pantheon%3C%2Fp%3E%0A%3Cp%3EPages%3A%20304%3Cbr%3EAvailable%3A%20Now%3C%2Fp%3E%0A
More coverage from the Future Forum
Miss Granny
Director: Joyce Bernal
Starring: Sarah Geronimo, James Reid, Xian Lim, Nova Villa
3/5
(Tagalog with Eng/Ar subtitles)
UAE currency: the story behind the money in your pockets
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
%3Cp%3EMATA%0D%3Cbr%3EArtist%3A%20M.I.A%0D%3Cbr%3ELabel%3A%20Island%0D%3Cbr%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
More from Neighbourhood Watch:
