Qatar fund to buy 20% of BAA, Heathrow operator, for $1.4 billion

Qatar sovereign investment fund will buy from the Spanish group Ferrovial 20% stake in BAA, owner of Heathrow, for 900 million pounds ($1.4 billion), according to the Financial Times. Ferrovial and its partners bought BAA six years ago to 4.3 billion pounds ($6.75 billion) paid in capital investment and have invested since then 500 million pounds ($785 million) in the company. The Spanish group will get this year dividends of 240 million pounds ($376.6 million) from BAA, so the total investment capital at the British company is about 4.5 billion pounds ($7 billion). The alleged market value of the transaction with the Qatar sovereign fund is similar to the amount resulting from this calculation.

The resemblance of the two amounts actually hides the deep decline of BAA business in the first three years in Ferrovial portfolio, marked by a strong decrease of traffic in the terminals operated by the company, due to the global financial crisis, writes the FT. “From 2006 until now they have created zero value, and what today seems a great exit is only because three years ago they were in the red” comments a financial analyst in London. Ferrovial has reduced its stake in BAA last year to only 49% and announced Friday that it will sell another 10%. Other partners who participated in the acquisition in 2006, Britannia Airport Partners and GIC Singapore, will sell to Qatar fund 5% of BAA.

Emirate’s sovereign fund will control 20% of the company shares. Airports operator had at the end of June a net debt of 11 billion pounds ($17.3 billion). Ferrovial said it has no intention to exit BAA’s ownership, but has not ruled it could give up more stock. Spanish group will own 39% of BAA after completion of the transaction with the Qatar sovereign fund.

Qatar Investment Authority, the parent company of Qatar Holding, recently positioned itself as a major investor in infrastructure and purchased shares in the mining giant Xstrata and oil group Shell. Besides Heathrow, BAA also owns airports in Glasgow, Aberdeen, Southampton and Stansted.