Saudi Arabia's Heathrow Airport Acquisition: Fact Or Fiction?

Saudi Arabia's Public Investment Fund (PIF) has bought a 10% stake in Heathrow Airport. The deal, worth £2.37 billion ($3 billion), was agreed with Spanish infrastructure firm Ferrovial, which has been selling off its Heathrow position since acquiring a 56% stake in 2006. The remaining 15% of Ferrovial's stake was sold to France-based private equity fund Ardian.

Saudi Arabia's Public Investment Fund (PIF) buys 10% stake in Heathrow Airport

Saudi Arabia's Public Investment Fund (PIF) has agreed to buy a 10% stake in Heathrow Airport from Spanish infrastructure giant Ferrovial. The deal, worth £2.37 billion ($3 billion), will see Ferrovial sell its entire 25% stake in Heathrow's parent company, FGP Topco.

The transaction is still subject to regulatory approval. If approved, the deal would end Ferrovial's 17-year investment in the UK airport operator, which started at 56% in 2006 but was reduced to 25% by 2013.

The remaining 15% of FGP Topco will be sold to the French private equity group Ardian. Other investors in Heathrow's parent company include the Qatar Investment Authority, which has a 20% stake, as well as sovereign wealth funds from Singapore and China, and pension funds from Quebec, Australia, and the UK.

PIF is one of the world's most active sovereign wealth funds, with more than $700 billion in assets due to its oil wealth. The fund has recently been investing in sports such as football and golf. However, it is controlled by Saudi Arabia's Crown Prince Mohammed bin Salman, whose government has been accused of numerous human rights violations.

Heathrow Airport is one of the world's busiest airports, with passenger numbers trebling in 2022 and recently surpassing pre-pandemic levels. However, the airport has been losing money due to its significant debt and the aggressive hikes in the cost of borrowing.

PIF is one of the world's most active sovereign wealth funds

Saudi Arabia's wealth fund, the Public Investment Fund (PIF), has taken a 10% stake in Heathrow Airport, worth £1 billion. This deal was made with the Spanish infrastructure company Ferrovial, which sold its entire 25% stake in Heathrow's parent company, FGP Topco. The PIF is Saudi Arabia's sovereign wealth fund and is one of the world's most active and largest sovereign wealth funds. It has more than $700 billion (£551 billion) in assets, and this figure is expected to increase to over $1 trillion by 2025.

The PIF has a diverse portfolio of investments, including oil, renewable energy, tourism, and entertainment. The fund has recently been investing in sports such as football and golf, and it also owns Premier League football club Newcastle United. The PIF has a stated goal of diversifying Saudi Arabia's economy away from oil and has been investing in foreign companies such as Uber and Tesla.

The fund is controlled by Saudi Arabia's crown prince, Mohammed bin Salman, and has faced controversy due to its lack of transparency and close ties to the Saudi government, which has been accused of human rights violations. Despite this, the PIF has been recognised as the world's most valuable sovereign wealth fund brand by Brand Finance, with a brand value of $1.1 billion and an A+ brand strength rating.

The PIF's acquisition of a stake in Heathrow Airport is part of its strategy to drive economic transformation and achieve ambitious growth prospects. With its significant resources and influence, the PIF is a powerful force in the global investment landscape.

PIF is controlled by Saudi Crown Prince, Mohammed bin Salman

Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), is controlled by Crown Prince Mohammed bin Salman. The PIF has been transformed from a conservatively managed fund to one of the world's largest and most aggressive funds, with over $700 billion in assets. This transformation is driven by Mohammed bin Salman, who is the crown prince, prime minister, PIF chairman, and the de facto ruler of Saudi Arabia. Through the PIF, the crown prince has consolidated unprecedented economic power, with few constraints on how he deploys the nation's wealth.

Mohammed bin Salman's control of the PIF was established in 2015, when he restructured its governance framework and approach to investment. He is both the chairman of the PIF and its oversight body, the Council of Economic and Development Affairs (CEDA). As prime minister, he also has the authority to appoint all members of the PIF's Board of Directors. This has resulted in a concentration of immense control and oversight of the PIF in the hands of the crown prince, allowing him to unilaterally direct enormous sums of state wealth.

The PIF has been linked to human rights abuses, including the 2017 "anti-corruption" crackdown involving arbitrary detentions and the 2018 murder of journalist Jamal Khashoggi. The fund has also been criticised for a lack of transparency and accountability, with concerns raised over whether the funds are invested and managed in a way that satisfies international human rights norms.

The PIF's investments in foreign sporting events, such as the LIV golf tour and the Premier League football club Newcastle United, have been seen as attempts to whitewash the Saudi government's reputation and deflect attention from human rights violations.

Mohammed bin Salman's government has been accused of human rights violations

In November 2023, Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), took a 10% stake in Heathrow Airport for £1 billion. The fund is controlled by Saudi Arabia's crown prince, Mohammed bin Salman, whose government has been accused of numerous human rights violations.

Mohammed bin Salman has been accused of human rights violations since he came to power in 2015. Amnesty International has reported that the kingdom has witnessed a widespread crackdown on freedom of expression, targeting human rights defenders, journalists, writers, and activists who have expressed opposition or criticism of the government. Arbitrary detentions, unfair and lengthy trials, and restrictions on fundamental rights have been employed to suppress dissent.

The case of Abdul Rahman Al-Sadhan, an activist sentenced to 20 years in prison for tweeting, exemplifies the government's intolerance for dissent. His sister, Areej Al-Sadhan, stated, "In Saudi Arabia, daring to defend your rights is a crime." The government has also been accused of state-sponsored digital surveillance and targeting of activists abroad, further exacerbating an atmosphere of fear and repression.

Additionally, the brutal murder of Saudi journalist Jamal Khashoggi in the Saudi Consulate in Istanbul in October 2018 has been linked to Mohammed bin Salman's government. Khashoggi was a prominent critic of the crown prince and his policies, writing for the Washington Post as a global opinion writer. A declassified US intelligence report released in February 2021 asserted that Mohammed bin Salman was complicit in the killing.

The Wilson Center for Studies described the Saudi Crown Prince as a dictator and an enemy of democracy and human rights. They urged the administration of US President Joe Biden to carefully consider the implications of engaging with Mohammed bin Salman, highlighting the potential damage he could inflict on the promotion of democracy and human rights globally.

Furthermore, Saudi Arabia's involvement in the long-running armed conflict in Yemen has been implicated in war crimes and other serious violations of international law. The Saudi-led coalition has been accused of contributing to a humanitarian disaster, with millions of people on the brink of famine.

The government has also been criticized for its treatment of women's rights activists, such as Loujain al-Hathloul, who was subjected to a travel ban after her release from prison. Women in Saudi Arabia continue to face discrimination in law and practice, including in matters of marriage, divorce, child custody, and inheritance.

The European Union has raised concerns about Saudi Arabia's continued application of the death penalty, including for drug-related offenses and non-lethal crimes, as well as lengthy prison terms imposed for social media activity.

Heathrow Airport is currently unprofitable

Passenger numbers at Heathrow trebled in 2022, and the airport was the fourth-busiest airport in the world by passenger traffic that year. However, the airport has also seen a large increase in cargo-only flights, particularly during the COVID-19 pandemic.

In September 2024, the competition regulator rejected an appeal submitted by Heathrow against a ruling by the Civil Aviation Authority forcing it to cut passenger charges by almost a fifth in 2024. The average charge per passenger at Heathrow for 2023 was £31.57, but this was set to fall to £25.43 in 2024 and "remain broadly flat" until the end of 2026.

Heathrow Airport Holdings, which owns and operates the airport, has proposed using the existing two runways in 'mixed mode', allowing aircraft to take off and land on the same runway, to increase the airport's capacity. The company has also proposed building a third runway to the north of the airport, which would significantly increase traffic capacity.

In November 2023, Spanish infrastructure firm Ferrovial agreed to sell its 25% stake in Heathrow Airport to private equity firm Ardian and Saudi Arabia's Public Investment Fund (PIF) for £2.37 billion. PIF is one of the world's most active sovereign wealth funds, with more than $700 billion in assets thanks to its oil wealth.

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