Luke Barr
Sat, 6 April 2024
heathrow airport
The £6bn sale of Heathrow Airport is at risk of collapse after the Australian investment giant Macquarie ruled out buying a stake in the business.
Macquarie’s withdrawal has exposed a dearth of prospective buyers in Heathrow, largely because of the high price set by Saudi Arabia’s Public Investment Fund (PIF).
PIF triggered a battle for control of Heathrow late last year after it teamed up with the private equity firm Ardian to buy a 25pc stake in Britain’s biggest airport for £2.4bn from Ferrovial, the Spanish construction company.
However, other shareholders subsequently triggered so-called tag-along rights, with three others seeking to cash in on the lucrative offer.
They are the Canadian pension fund CDPQ, Singapore’s sovereign wealth fund GIC and the UK’s Universities Superannuation Scheme – meaning a 60pc threshold must be met to complete the sale.
The Telegraph revealed last month that Macquarie was plotting a bid to acquire the remaining 35pc stake, but the investor subsequently scrapped acquisition plans last week.
An investment fund backed by Sheikh Mansour bin Zayed Al Nahyan had reportedly shown an interest in buying a stake in Heathrow - UAE PRESIDENTIAL COURT/via REUTERS
Sources close to the deal have claimed there are no other bidders immediately apparent to support PIF and Ardian, with the latter unsuccessfully leading a charm offensive to identify another investor to raise funds.
This revelation also effectively rules out Abu Dhabi’s Mubadala investment fund, backed by Sheikh Mansour bin Zayed Al Nahyan, which had reportedly shown an interest earlier this year.
It is thought both PIF and Ardian could increase their bids but by nowhere enough to reach £6bn. They have currently agreed to take 10pc and 15pc respectively.
It comes amid a looming deadline to reach an agreement with Heathrow’s shareholders.
A significant hurdle in reaching a deal is the price attached to Heathrow, as the £2.4bn bid for a 25pc stake signed off by PIF and Ardian last year raised eyebrows in the City by valuing the airport at £9.5bn.
Any investor must be willing to take an active role in the running of the airport, which has been beset by strike action and disruption in recent years.
An alternative to the deal collapsing could be an agreement between the shareholders in which they accept selling smaller stakes in return for a lower sum.
However, a source close to the talks said this could leave some investors dissatisfied.
Another option could be for shareholders to abandon tag-along rights altogether, meaning Spain’s Ferrovial can offload its shares having spent 17 years as Heathrow’s largest investor.
The issue of Heathrow’s ownership has been hanging over the airport for months, at a time when new chief executive Thomas Woldbye is attempting to overhaul the business.
Since the rebound in travel post-pandemic, the issue of capacity has been thrust back onto the agenda at Heathrow – raising renewed questions over the airport’s plans for a third runway.
Restrictions relating to its expansion have led to high-profile industry chiefs arguing that Heathrow has lost its status as a global transport hub.
Paul Griffiths, former managing director of Gatwick Airports and current boss of Dubai Airports, said Heathrow has suffered from its “shortage in capacity”.
Current shareholders in Heathrow have also previously been criticised for starving the company of investment, with scrutiny placed on £4bn of dividends extracted before the pandemic. Since then, debts in the business have ballooned to almost £20bn.
Heathrow and Ardian declined to comment.
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