PIF Bidding for UK’s Newcastle International Airport?

Saudi Arabia’s sovereign wealth fund – The Public Investment Fund (PIF) – The announcement that Newcastle Airport in the UK is being up for sale, has seen Saudi Arabia’s Public Investment Fund (PIF), tipped as the favourite to bid for a 49% stake.

The London-based Infrabridge, a global, diversified infrastructure manager specialising in middle-market investment opportunities, is offering the 49% stake to prospective bidders in Newcastle International Airport.

According to media reports, the announcement that Newcastle Airports is up for sale is the latest in a flurry of UK airport takeovers with London City, Birmingham and Bristol airports also announced as being up for sale by their Canadian pension fund owner, last month.

Besides PIF, two infrastructure funds – EQT Infrastructure and Arjun Infrastructure Partners – are also reportedly positioning themselves to bid for a 49% stake in the Newcastle International Airport, the reports said.

Quoting sources, Ion Analytics said that the two infrastructure funds were among the investors “closely monitoring” InfraBridge’s holding in the airport, adding that they are expected to submit an offer when the deal hits the market.

“Both investors have conducted soft due diligence and traffic analysis over the summer, said the sources, with one of them adding that technical advisors have already been appointed for one of the two investors, Ion Analytics said three months ago.

It may be recalled that PIF secured a 15% stake in London Heathrow on December 12, alongside French private equity firm, Ardian, which secured a 22.6% stake in the airport. The combined 37.6% stake in the hub from Ferrovial is reported to be worth $4.13 billion.

Business Opportunity

Serving the UK’s North East region, Newcastle is the 11^th busiest airport in the UK and reported its best ever financial results in 2023.

The airport saw around 4.9 million passengers passing through its doors in 2023 and expects to exceed the five million passenger mark in 2024. Total revenues for the airport in the 2023 financial year increased 22% to $100.32 million, while operating profit grew 36% to $42.99 million. The worth of the Newcastle airport is said to be around $1.27 billion.

The proposed takeover would see the new investor acquire a 49% stake in the airport, with the remaining 51% under the control of seven local authorities: Newcastle, Gateshead, Sunderland, Durham, North Tyneside, South Tyneside and Northumberland.

The Saudi fund has an interest in the region as it has already acquired Newcastle United Football Club in October 2021.

Other Airports for Sale

In addition to the multiple airports in the UK that are currently up for sale, the owner of AGS Airports (which operates Aberdeen, Glasgow and Southampton airports) confirmed in November that AviAlliance has acquired the airports from Ferrovial and Macquarie in a deal worth $1.94 billion. With airports in general experiencing ongoing growth in passenger traffic and increasing demand for air travel in the post-pandemic era, many UK hubs are expecting to record their busiest year ever in 2024.

Commenting on the Heathrow acquisition of a $4.13 billion stake, the UK’s Chancellor of the Exchequer Rachel Reeves said that attracting foreign investment to the UK shores supports the country’s goal of delivering economic growth in every part of the country to improve living standards.

“It’s a strong vote of confidence in the UK and comes on top of the $79.90 billion of investment secured from international investors earlier this year, showing Britain is back in business,” she said.