Ferrovial to sell stake in London Heathrow? Part one – French and Saudi interest in 25% ownership

Airport sector M&A activity has been dormant for the most part during the pandemic, but as predicted by CAPA, the Sydney Airport deal that was concluded at the beginning of the year and led to it being delisted has kick-started the sector again - albeit belatedly.

In the past few weeks deals have been concluded by which VINCI Airports has acquired, wholly or partly, more than 20 airports in the mid-Atlantic (Cape Verde) and the Caribbean (Mexico) under concession, and as reported in the last few days by CAPA, IFM Investors through its European subsidiary AGE is pushing for a further increase in its holding of Flughafen Wien.

Now it transpires that negotiations may have taken place between the Spanish infrastructure giant Ferrovial and a consortium of the French insurance firm Ardian and the Saudi Sovereign Wealth Fund for the sale of Ferrovial's 25% stake in (London) Heathrow Airport Holdings, which it has held since BAA was delisted in 2006 and sold to a Ferrovial-headed consortium.

At the moment it is no more than conjecture, but a sale might make sense to Ferrovial.

Ferrovial already has airport interests in the United States, where the propensity for P3 deals to build and operate terminals at major airports is growing. With a construction division that dates back to 1927 it is well placed to both build and manage such infrastructure.

Other players may yet emerge, including some of the other existing investors, or the sale prospect might simply fizzle out.

If it progresses, there is sure to be political and even popular opposition to even more foreign ownership of the UK's major air gateway (the direct UK holding amounts to only 10%) while the Saudi government remains persona non grata to many people in the country.

This is part one of a two-part report.