Financial News

  • 12 December 2013, 11:29

Heathrow Investor Lines Up UK Airports Deal

The Spanish infrastructure giant which bought Heathrow Airport in a debt-fuelled deal seven years ago has lodged its interest in acquiring the company's remaining regional UK assets.

Sky News has learnt that Ferrovial has told the board of Heathrow Airport Holdings that it wants to buy Aberdeen, Glasgow and Southampton airports.

Heathrow's board, which is chaired by the City veteran Sir Nigel Rudd, is expected to formally consider the approach from Ferrovial during the first quarter of next year.

One of Heathrow's other minority shareholders is also understood to be interested in pursuing a deal, although it is unclear whether this would be in partnership with Ferrovial.

A decision to sell the airports would come amid a crucial Government-commissioned review being led by Sir Howard Davies, the former director of the London School of Economics, who will outline several options for expanding airport capacity in the South East next week.

Sir Howard is expected to narrow the field of options to around a handful, most of which will include a third runway at Heathrow.

With the direction of Sir Howard's thinking becoming clearer, several Heathrow Holdings shareholders and board members are keen to dispose of the three regional airports that are the last remaining remnants of the former BAA's monopoly over the UK's aviation infrastructure.

Sky News revealed last month that Global Infrastructure Partners, the owner of London City, Gatwick and Edinburgh airports is interested in adding Aberdeen to its portfolio.

Ferrovial, which took BAA private in 2006 in a debt-fuelled deal, has steadily reduced its investment in Heathrow in recent years by selling small chunks of shares to sovereign wealth funds in China, Qatar and Singapore.

In October, the Universities Superannuation Scheme, one of the UK's biggest pension fund managers, bought an 8.65% stake in Heathrow's holding company, a move which saw Ferrovial's shareholding lowered to 25%.

Ferrovial is now interested in acquiring Aberdeen, Glasgow or Southampton airports through a separate vehicle, with bankers suggesting that they would collectively command a price-tag of as much as 1.2bn.

Shortly after Ferrovial's takeover of BAA, competition authorities ordered the company to break itself up by selling Stansted, Gatwick and either Glasgow or Edinburgh, the latter of which was offloaded two years ago.

Manchester Airports Group, which now owns Stansted, is also a likely bidder for some of the Heathrow-owned airports, analysts believe.

Heathrow Airport accounts for more than 95% of its parent company's annual profits, making the sale of the other regional assets "inevitable" within the next three years, said one.

A Heathrow Airport Holdings spokesman declined to comment.

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