LONDON, Aug 9 (Reuters) – Spain’s Ferrovial is considering options for its 25% stake in London’s Heathrow, two sources told Reuters, and has held preliminary talks with outside advisers about the future of its stake at Britain’s largest airport.
The initial talks come amid interest in Ferrovial’s stake from private equity firm Ardian, which has held talks with its own advisers on a possible joint proposal with the Public Investment Fund (PIF). ) Saudi, these sources and another person familiar with the matter said.
Ferrovial (FER.MC) has not yet made a final decision and talks may not result in a sale, all sources said.
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Shares of the Madrid-listed company rose 4.2% according to the Reuters report. By market close, they were up 3.7%, marking their second-best day in five months and becoming the third-best performing stock on the pan-European STOXX 600 index.
Ferrovial and Ardian both declined to comment while PIF did not immediately respond to a request for comment.
Ferrovial’s stake in Heathrow is worth around 1.6 billion euros ($1.63 billion), Citi analysts said on Tuesday, commanding an overall valuation of 26 billion euros, including debt from the UK airport.
However, given the high transaction multiples previously applied to the sale of London Luton and Gatwick airports, Ferrovial could collect between 2.9 billion and 3.5 billion euros, according to the note from Citi.
Insight Investment Research analyst Robert Crimes told Reuters the equity value of Ferrovial’s 25% stake in Heathrow could be close to €2 billion. He added that Ferrovial’s shares had yet to reflect the post-pandemic recovery in traffic volumes and inflation-linked returns.
Heathrow, which aeronautical data firm OAG said was the world’s fifth-busiest airport in July, has been hit hard by coronavirus closures but raised its traffic forecast for 2022 to 54.4 million passengers in June after a rebound in travel. Read more
Last month, Heathrow, like some other airports in Europe, asked airlines to stop selling tickets for summer departures and to limit the number of passengers to limit queues, baggage delays and cancellations as it battled pent-up demand. Read more
Madrid-based firm Ferrovial, which controls Spanish transport infrastructure developer Cintra and has stakes in highways in the United States and Canada, has invested in Heathrow Airport for 16 years and ranks as its largest investor.
The Qatar Investment Authority (QIA), which has a 20% stake in Heathrow, is the second largest investor in the busy British airport, while the Caisse de depot et placement du Quebec (CDPQ), the wealth fund Singapore’s GIC and China Investment Corporation also have significant holdings.
QIA declined to comment while CDPQ, GIC and China Investment Corporation were not immediately available.
Paris-based Ardian partnered with Crédit Agricole Assurances in 2015 to acquire a 49% stake in 2i Aeroporti, one of Italy’s largest airport networks, with indirect stakes in Malpensa and Linate in Milan, among others .
A separate source who worked on Ferrovial’s 2006 acquisition of Heathrow’s stake said that while the Spanish company’s board had frequently reviewed its strategy over the years, it had never come to a conclusion. consensus on the sale of the stake.
This source said Ardian had made an initial approach for participation at Heathrow last year, but talks had not progressed.
Ferrovial appointed aviation veteran Luke Bugeja to lead its airport business last year, which one of the sources said could speed up a strategic review of Heathrow.
Airports accounted for a third of Ferrovial’s proportionate earnings before interest, tax, depreciation and amortization (EBITDA) in the first half of this year, up from 45% before 2019 before the industry was hit by the COVID-19 pandemic.
After a string of losses, Ferrovial last week pointed to a pick-up in airport activity, thanks to an easing of restrictions as it posted profits. Read more
He also bet more on the industry in June with a deal to buy a stake in the consortium that will build and operate a new terminal at JFK International Airport in New York.
But his experience at Heathrow has been difficult and the chief financial officer of its airport business, Ignacio Castejon, said during last year’s third quarter results that he was “very skeptical” about bringing in additional capital, citing a lack of recovery of its economic value and low equity. Return.
Heathrow said last year it did not expect a full recovery until 2026, after airports around the world suffered a huge drop in traffic when the COVID-19 pandemic grounded planes. L4N2RM1R1]
Ferrovial purchased an indirect 55.87% stake in Heathrow Airport Holdings in 2006. It sold 10.6% to Qatar Holding LLC in 2012 and eventually reduced its stake to 25% in 2013.
The company has openly criticized the UK aviation regulator’s decision in June to set lower-than-expected caps on the landing fees Heathrow can charge over the next four years. Read more
As companies have slowed mergers and acquisitions as inflation rages and recession fears mount, the infrastructure sector landed one of the biggest deals this year, a $58 takeover bid. billion euros on the Italian Atlantia (ATL.MI). Read more
($1 = 0.9794 euros)
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Reporting by Isla Binnie, Andres Gonzalez and Pamela Barbaglia; additional reporting by Danilo Masoni and Yousef Saba; Editing by Alexander Smith and David Evans
Our standards: The Thomson Reuters Trust Principles.
EXCLUSIVE Heathrow owner Ferrovial is exploring stake options in Britain’s biggest airport – sources