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CIC buys 10% stake in Heathrow owner

By Diao Ying in London | China Daily | Updated: 2012-11-02 07:54

CIC buys 10% stake in Heathrow owner

China Investment Corporation, the country's sovereign wealth fund, has increased its investment in the infrastructure of the United Kingdom after buying a 10 percent stake in the company that owns London's Heathrow Airport.

It's the second major investment made by CIC this year in the UK's infrastructure, after the manager of China's $410 billion wealth fund, took an 8.86 percent stake in Thames Water, the largest water and sewage company in the UK, in January.

Figures provided by Ferrovial, the Spanish company selling some of the Heathrow shares, show the fund is paying 450 million pounds ($726 million) for the 10 percent stake in Heathrow Airport Holdings Ltd, which was previously known as BAA Ltd.

Under the terms of the agreement, it will buy a 5.7 percent stake in FGP Topco Ltd from Ferrovial for 257.4 million pounds. FGP Topco is a holding company which owns Heathrow Airport Holdings Ltd.

CIC will get the remaining 4.3 percent stake from other shareholders in FGP Topco Ltd for 192.6 million pounds.

Ferrovial owned nearly half of Heathrow Airport Holdings before the unconditional deal, which was completed on Wednesday, and will now control 44.27 percent of its shares.

The deal comes as European infrastructure operators seek funds to upgrade their assets, amid the eurozone debt crisis.

A company statement said the transaction would bring "further enhancement to Ferrovial's liquidity position and financial flexibility".

Inigo Meiras, Ferrovial's chief executive officer, said the sale was a further part of its "investment diversification strategy".

The company announced in August it sold 10.62 percent of FGP Topco to Qatar Holdings LLC, which is owned by Qatar Investment Authority, the sovereign wealth fund manager of the Gulf state.

That sale is still awaiting approval from EU competition regulators.

Mark Williams, chief Asia economist at Capital Economics, a research company, said that compared with other developed economies, the UK is more open to Chinese investment, especially as the British economy continues to struggle.

Jin Liqun, chairman of the board of supervisors of CIC, had indicated in May that the organization favored investment in the UK.

"The UK is open. That's why we have spent a lot of money here," he said.

Heathrow Airport Holdings Ltd owns Heathrow and Stansted airports in London, Glasgow and Aberdeen airports in Scotland, and Southampton airport in southern England.

Collectively, they handled 75.8 million passengers in the first nine months of this year, according to Ferrovial's figures.

After the deal, CIC will join the boards of FGP Topco and Heathrow Airport Holdings. Britannia Airport Partners LP, GIC and Alinda will continue as shareholders in FGP Topco.

(China Daily 11/02/2012 page13)

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