Heathrow Airport, Britain’s international gateway, is facing further turmoil as investors who own 35 per cent of it have announced that they will be selling.
Ferrovial, the largest shareholder in the airport, sold its 25% stake to the company.
Ferrovial announced at the end of 2012 that it was selling its stake for £2.37billion. This is the biggest stake Heathrow has had since 2006 when the BAA privatised group was acquired. The value of the company’s holding in Heathrow had been written down to zero.
Heathrow Heathrow is Britain’s and Europe’s busiest Airport. It handled just 79 million passengers last year, which was slightly less than its pre-pandemic levels of 81 millions. It hasn’t paid a dividend for four years, and its debts amount to £16 billion. Politicians have scuttled plans for a major expansion via a third runway.
Ferrovial’s share was acquired by Ardian Capita – the French company formerly known under the name Axa Private Equity – which received 15%. The remaining 10% went to Public Investment Fund, the Saudi Arabian sovereign wealth fund, well known in the UK for owning Newcastle United FC and Aston Martin.
Ferrovial’s decision to sell triggered the so-called “tag-along” clause, which allows other Heathrow investors to sell too. Tag-along rights give minority shareholders the right to receive the same price they received in the original transaction.
Three other Heathrow shareholders, representing 35 per cent, have now confirmed their tag-along right.
The shareholders of the Australian Retirement Trust are believed to be the Canadian Caisse de depot et placement du Quebec investor, the Singaporean sovereign fund GIC and the Brisbane-based Australian Retirement Trust.
Ardian and PIF are entitled to first purchase all or a portion of the 35% of shares that are now available for a price of £3.3billion.
PIF is not interested in increasing its stake above 10%. Ardian, it is understood, does not wish to increase its stake beyond 25 percent. This would likely attract unwanted media and political interest.
A failure to find a purchaser for the new 35% stake, which has been placed on the market, could cause the Ferrovial deal to be halted or rescinded.
The situation means that Ardian must either buy the remaining 35 percent stake, which it does not want to do, or find buyers willing to pay an aggregate of £3.3 billion to acquire the shares.
Heathrow’s remaining shareholders are unlikely to want to purchase more airport shares at a higher price. The other 40 percent of Heathrow are owned by Qatari sovereign wealth funds and Chinese pension funds, as well as the UK academic pension fund Universities Superannuation Scheme.
Heathrow has seen a number of changes in its boardrooms since the 1980s, when it was privatised by the Thatcher government.
One City source stated: “Heathrow has a good chance of recovery. Compared to the way it was run before, there is a lot of room for improvement under new management.”
John Holland-Kaye resigned as Heathrow’s chief executive in the fall and was replaced by Thomas Woldbye who had previously run Copenhagen airport.
If they got involved, BlackRock, the world’s largest infrastructure investor, and Macquarie would likely face issues of competition.
Heathrow has declined to comment.