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Abu Dhabi sovereign wealth fund Mubadala said to consider buying Heathrow stake

A 10% stake in Heathrow Airport is to be sold to Saudi Arabia’s Public Investment Fund (Steve Parsons/PA) (PA Wire)
A 10% stake in Heathrow Airport is to be sold to Saudi Arabia’s Public Investment Fund (Steve Parsons/PA) (PA Wire)

Abu Dhabi’s Mubadala Investment Co. is considering buying into Heathrow airport, according to people familiar with the matter, in a move that could see it join Saudi Arabia’s Public Investment Fund and Qatar Investment Authority as prominent shareholders in the London hub.

Sovereign wealth fund Mubadala is weighing an investment after it was approached by Paris-based buyout firm Ardian, the people said, asking not to be named as the information is private.

Deliberations are ongoing and no agreements have been reached, the people said. Mubadala is yet to make a final decision on the investment and could decide not to go ahead with the acquisition.

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Spanish infrastructure company Ferrovial SE agreed in November to sell its 25% stake to Saudi’s PIF and Ardian for £2.37 billion ($2.98 billion).

However, shareholders accounting for a further 35% of Heathrow’s capital joined the stake sale via so-called tag-along rights, meaning their positions must also be sold for the deal to go through.

Over the past few years, deep-pocketed Middle Eastern wealth funds have flocked to infrastructure assets around the world as part of their efforts to diversify their oil dependent economies.

If Mubadala buys into Heathrow, it would become the airport’s third Gulf state-backed shareholder alongside PIF and the Qatar Investment Authority which holds 20%. Ferrovial’s decision to sell part of its holding to the PIF had raised concerns over further Middle Eastern ownership of a key UK asset.

Britain has previously permitted ownership of infrastructure and key assets by Middle Eastern investors, with Dubai-based DP World running ports and freight terminals at London Gateway and Southampton. However, the UK government has intervened in a proposed acquisition of the Telegraph newspaper by a vehicle backed by Abu Dhabi’s Sheikh Mansour Bin Zayed Al Nahyan.

Mubadala is overseen by Sheikh Mansour, who also owns Manchester City FC. It signed a Sovereign Investment Partnership with the UK Office for Investment in 2021. As part of that agreement, the UAE committed £10 billion to Britain.

The fund has previously invested in UK’s CityFibre, which provides broadband infrastructure. Another UAE state-backed firm, Emirates Telecommunications Group Co., is the biggest shareholder in Vodafone Group Plc.

Ferrovial has approached several sovereign and pension funds including Canada Pension Plan Investment Board, Brookfield, Macquarie and Temasek to gauge their interest in buying, Spanish newspaper Cinco Días reported in January.

The additional 35% of shares need to change hands for Ferrovial to be able to sell its own holding, the company said in a regulatory filing in January. While PIF does not intend on going beyond 10%, Ardian is considering buying more, Bloomberg reported.

Ferrovial has owned a stake in Heathrow since 2006 when it bought a majority of the airport for $18.8 billion. The firm progressively reduced its stake.

Qatar holds 20% of Heathrow’s capital, while smaller investors Caisse de dépôt et placement du Québec, Singapore’s GIC sovereign fund and the Australian Retirement Trust each have stakes below 13%. Britain’s Universities Superannuation Scheme holds 10%.

Spokespeople for Heathrow, PIF, Ardian and Mabadala declined to comment. A spokesperson for Ferrovial could not be reached before publication.