According to two people who spoke to reporters, Spain’s Ferrovial is considering options for its 25% share in London’s Heathrow and has already had preliminary discussions with outside advisors on the future of its ownership in Britain’s busiest airport.
The private equity firm Ardian, which has held discussions with its own advisers on a potential joint proposal with Saudi Arabia’s Public Investment Fund (PIF), has expressed interest in Ferrovial’s stake, prompting the early-stage discussions, according to these sources and another person familiar with the situation.
According to these reports, Ferrovial has not made a final decision and the discussions may not result in a sale.
Both Ferrovial and Ardian choose not to respond to inquiries about the Heathrow conversations.
A request for comment from PIF was not immediately complied with.
According to analysts at JPMorgan in May, the total value of Heathrow, including debt, is approximately 24.3 billion euros ($25 billion). The equity value of Ferrovial’s Heathrow investment, according to JPMorgan, is 611 million euros.
Heathrow, which according to aviation Data Company OAG was the fifth busiest airport in the world in July, was severely impacted by coronavirus lockdowns, but it increased its 2022 traffic prediction to 54.4 million passengers in June following a travel upswing.
As it struggled with pent-up demand last month, Heathrow, like some other airports in Europe, urged airlines to cease selling tickets for summer departures and put a limitation on the number of passengers.
Ferrovial, located in Madrid, is the airport’s single-largest investor and controls the Spanish transportation infrastructure firm Cintra. Ferrovial also owns investments in American and Canadian highways.
The second largest shareholder in the popular British airport is Qatar Investment Authority (QIA), with a 20 percent interest. China Investment Corporation, Caisse de dépôt et placement du Québec, and Singapore’s GIC also have sizable holdings.
A statement from QIA, CDPQ, GIC, or China Investment Corporation could not be obtained right away.
In 2015, Paris-based Ardian and Credit Agricole Assurances joined together to purchase a 49 percent share in 2i Aeroporti, one of Italy’s largest airport networks, which also includes indirect stakes in Linate and Malpensa in Milan.
The board of the Spanish company has often evaluated its strategy over the years, according to a different source who worked on the 2006 acquisition of Ferrovial’s Heathrow investment, but it had never come to a decision regarding selling the interest.
According to this source, Ardian made a preliminary proposal for the Heathrow share last year, but negotiations stalled.
AIRPORT BETS
Ferrovial selected aviation industry veteran Luke Bugeja to lead its airports’ division last year, a move that one source claimed may quicken a Heathrow strategic review.
In the first half of this year, airports made up a third of Ferrovial’s proportional earnings before interest, taxes, depreciation, and amortization (EBITDA), down from 45 percent in the first half of 2019 when the COVID-19 pandemic hit the sector.
Following a string of setbacks, Ferrovial indicated last week that the airport business was recovering as it reported a profit, thanks to the lifting of constraints.
With a contract to purchase a part in the consortium that will construct and run a new terminal at New York’s JFK International Airport, it also increased its wager on the sector in June.
The airports’ division’s chief financial officer, Ignacio Castejon, stated during last year’s third-quarter earnings that he was “extremely cautious” about providing further cash due to the poor Heathrow experience and the low equity returns.
After airports all around the world experienced a significant drop in traffic as a result of the COVID-19 outbreak that grounded aircraft, Heathrow stated last year that it does not anticipate a full recovery before 2026.
In 2006, Ferrovial acquired a 55.87 percent indirect share in Heathrow Airport Holdings. It subsequently decreased its shareholding to 25% in 2013 after selling 10.6 percent to Qatar Holding LLC in 2012.
The company publicly protested the British aviation regulator’s decision to set lower than anticipated ceilings on the landing fees Heathrow can charge over the course of the next four years in June.
The infrastructure industry had one of this year’s largest deals, a 58 billion euro take-private bid for Italy’s Atlantia, while businesses have scaled down mergers and acquisitions as inflation soars and recession fears grow.
