Skift Take

BAA has never been a fun investment for Ferrovial, which would rather make its money on large construction projects and more dependable investments like toll roads.

Qatar’s sovereign wealth fund is buying 20% of Heathrow owner BAA in a move that adds the airport operator to a portfolio of British interests including Harrods and stakes in Barclays and J Sainsbury.

Ferrovial, the Spanish conglomerate and the largest shareholder, is to sell a 10.6% stake in BAA’s parent company to Qatar Holding. At the same time two more shareholders have sold shares representing 9.4% of the business to the fund, leaving it with a 20% investment in the owner of the Heathrow, Stansted, Glasgow, Aberdeen and Southampton airports. The total value of the transaction is £900m.

Qatar Holding, funded by proceeds from the world’s third largest gas reserves, said the UK was an “attractive investment destination” and that it saw “long-term fundamental strength in the British economy”. It added: “Qatar Holding looks forward to working together with our fellow shareholders and the management team of BAA to enhance the company’s industry leadership and create sustainable value.”

The transaction represents further retrenchment by Ferrovial from one of the UK’s most bruising foreign takeovers, although the Spanish group denied that it is seeking a full exit. With the ink barely dry on the €16bn takeover of BAA by a Ferrovial-led consortium in 2006, Heathrow buckled under a new security regime following the interruption of a plot to bomb airliners with liquid explosives.

Ferrovial’s reputation took years to recover and in 2010 it announced plans to sell off a chunk of its 55% shareholding, which will stand at less than 40% once the Qatar deal is completed.

At the time Ferrovial, frustrated by a perceived undervaluation of BAA in its share price, said it was selling a stake to get a market value for the asset. However, analysts said it would also help to get BAA’s £11bn debt burden off Ferrovial’s balance sheet by reducing the stake to less than 50%. BAA eventually sold a 5% stake to investment group Alinda Capital Partners, and removed BAA’s debt from Ferrovial’s balance sheet, while saying it had no intention of selling down its interest further.

Iñigo Meiras, chief executive of Ferrovial, whose interests range from toll roads to construction, denied that the conglomerate was paving the way for a full exit from what has at times been a traumatic investment. “After this transaction we are still the largest shareholder and will be two times bigger than the second largest. We are really committed to the asset,” he said.

Meiras added that Qatar Holding had been interested in a 20% stake at the time of the Alinda transaction but had been unable to reach a deal. The Qatari investment brought a wealthy partner on to BAA’s shareholder register, he said. “We have to invest a lot of money and with an investor like Qatar Holding we have a strong financial investor for the future,” he said.


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Tags: heathrow, qatar

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