Buyout group Ardian and PIF agree deal for £3.3bn stake in Heathrow

Private equity group Ardian and Saudi Arabia’s sovereign wealth fund have agreed to buy a 38 per cent stake in Heathrow for £3.3bn in a big shake-up of London’s busiest airport.

Infrastructure group Ferrovial will sell the vast majority of its stake in the airport after 18 years of ownership in a revised deal that addresses so-called tag-along provisions giving other investors the right to join in selling out of the company.

Ardian will acquire a 22.6 per cent stake in Heathrow’s parent company while Saudi Arabia’s Public Investment Fund will acquire 15 per cent, under terms announced on Friday. 

The original agreement was reached in November when Ardian and PIF negotiated a deal to buy out Ferrovial’s 25 per cent stake in the airport’s parent company for £2.4bn.

However, in January some of Heathrow’s other shareholders, with a combined stake of 35 per cent, sought to use the tag-along rights to sell a portion of their holdings alongside Ferrovial.

Other shareholders such as the Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), Singapore sovereign wealth fund GIC and the UK’s Universities Superannuation Scheme all intended at that point to exit, the Financial Times reported.

In the new deal, CDPQ and USS are joining Ferrovial as sellers, according to a person familiar with the matter. Ferrovial said in a statement that it will retain a 5.3 per cent stake.

The greater demand from sellers meant more investment was needed from Ardian and PIF. Ardian will become Heathrow’s biggest shareholder, followed by the Qatar Investment Authority at 20 per cent and PIF.

The deal values Heathrow at £8.7bn; the previous agreement was closer to £10bn.

The discount was not because of Heathrow’s performance, the person said, with the airport experiencing surging demand for travel across all its main routes.

In April Heathrow raised its forecasts for full-year passenger numbers from 81.4mn to 82.4mn. That would top 2019’s previous record.

Ardian, which specialises in infrastructure, said in a statement it was “pleased to have worked closely with the parties to find this revised agreement”.

CDPQ and USS declined to comment.