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Blackstone buys stake in UK airports group for £235mn
US private equity investor takes 22% holding in owner of Aberdeen, Glasgow and Southampton airports
Blackstone has struck a £235mn deal to acquire a stake in the owner of Aberdeen, Glasgow and Southampton airports, as infrastructure investors look to profit from the booming travel sector.
The US private equity group on Friday said it would buy a 22 per cent stake in AGS Airports from Canadian pension investor PSP, which will continue to own the rest of the business.
PSP acquired AGS last year from the Spanish construction group Ferrovial and Australian asset manager Macquarie at an enterprise value of £1.5bn, including a £900mn equity valuation.
It holds its stake in AGS via its Germany-headquartered company AviAlliance, which has also backed airports serving Athens, Düsseldorf, Hamburg and Puerto Rico’s San Juan.
Blackstone’s investment comes on the heels of a broader uptick in private investment in UK transport infrastructure.
Its infrastructure unit has also invested internationally in toll road group Mundys, private jet services company Signature Aviation and the airport manager behind Rome’s Fiumicino and Ciampino.
“Transportation remains a key thematic focus area for Blackstone, given continued strong global growth in leisure travel,” said Greg Blank, chief executive of Blackstone Infrastructure Strategies.
AGS, whose sites accommodated more than 11mn passengers last year, had one of the most diverse mix of airlines of any UK airport group, and was making changes to accommodate large aircraft and to open up new routes and boost traffic, he added.
Private investors back several of the UK’s leading airports including London’s Heathrow and Gatwick.
Last year, Ferrovial agreed to sell the vast majority of its stake in Heathrow to private equity group Ardian and Saudi Arabia’s sovereign wealth fund.
Heathrow’s shutdown last week because of a fire at a nearby power substation has raised questions about the resilience of the UK’s infrastructure, leading to calls for further investment in contingency planning to avoid such disruptions.
Sandiren Curthan, PSP’s global head of infrastructure investments, said: “Both PSP and Blackstone are like-minded investors with long-term patient capital to support the development of AGS, which will benefit from the operational expertise of AviAlliance.”
Heathrow warns airlines risk having to pay £1bn for better power system
CEO says airport will review case for upgrading grid connections after outage that shut hub for nearly 24 hours
Heathrow’s chief executive has said it could cost about £1bn to install a more “resilient” power system to help avoid a repeat of the outage that forced the airport’s closure last week, and warned airlines could end up paying through higher charges.
In his first detailed explanation of the disruption which involved the cancellation of more than 1,300 flights, Thomas Woldbye defended Heathrow’s handling of the outage, but admitted he was “frustrated” that he was asleep as the crisis unfolded.
He told the Financial Times he was convinced the airport had no choice but to close in the early hours of Friday morning last week on safety grounds.
He accepted Heathrow needed to review whether it could have been more nimble and reopened more quickly, which could have minimised the chaos that affected more than 200,000 travellers.
“It’s a relevant question,” Woldbye said. “And I’ll start out by saying that, you know, we don’t profess to be 100 per cent perfect.”
Heathrow closed after a massive fire at a nearby electricity substation caused a power outage at the airport. Flights bound for Europe’s busiest hub had to divert to other airports, and Heathrow did not fully reopen until more than 24 hours later.
The scrutiny on Heathrow deepened after John Pettigrew, chief executive of National Grid, which operates the UK’s high-voltage transmission network, said power had always been available to the airport from two other nearby substations which were unaffected by the blaze.
The delay in reopening the airport was caused by Heathrow’s engineers having to reconfigure its power supply to take electricity from the other two substations, and then test that all its critical safety systems were working properly.
Woldbye said the airport would now assess whether it is possible to install a “fully resilient” power system which would allow it to quickly switch between power sources. He said it was not clear if this was possible, but that it might cost upwards of £1bn if it is.
Other options include buying more generators to power more of the airport during outages. Heathrow’s current diesel generators only power safety-critical parts of the operation such as the control tower during outages.
The airport’s regulatory model allows it to recoup its capital expenditure from the landing charges it levies on airlines, which are ultimately passed through to passengers in ticket prices.
Woldbye said Heathrow faced a balancing act as it assesses how much the airport should spend on improving its resilience.
“We need to look at our resilience . . . but how far up the supply chain do we need to go, and how much would that cost?” he added.
“That’s a dialogue we have to have with our airlines, because they are deeply involved in our investments . . . which has an influence on our charges. That’s a very big discussion.”
The Danish executive has come under scrutiny after the Sunday Times reported that he went to bed as the fire burned, leaving his chief operating officer Javier Echave to make the decision to close Heathrow at about 2am on Friday morning.
But Woldbye said he had gone to bed at around 11pm, before news of the fire emerged, and that his colleagues had tried to reach him but could not get through.
“This is slightly frustrating, but I went to bed before it happened,” he added. “Somebody gave me a call which somehow did not go through. I slept through part of the night, until I woke up early in the morning and realised what had happened.”
But Woldbye insisted that Heathrow’s emergency plans, including its gold command response team, had worked effectively.
“My job as CEO is not to lead every single crisis,” he said. “My job is to make sure that there is a resilient organisation that, given any condition, will be able to take the right decisions for the airport, and make sure that we do the right thing.
“And that’s what we have. I just want to underline that our gold command system was working the way it should.”
Woldbye said decisions over his future were for the Heathrow board, but that its members had indicated they will support him.
Heathrow’s own review into the handling of the electrical failure from Ruth Kelly, a board member and former UK transport minister, is expected by May. The government has launched its own probe.
Airlines have criticised Heathrow for its lack of resilience, and on Thursday Luis Gallego, chief executive of British Airways owner IAG, said he expected the disruption to cost his business “tens of millions” of pounds.
Woldbye did not rule out compensating airlines, but said he wanted to wait until there are more details on “exactly what happened”.
“Having lost a day in the airport’s history is not something we are overall proud of or happy with, but I don’t think it changes the fact that Heathrow has been operating excellently for many, many years,” he added.
“I really regret this happened on my watch. This is not something I take lightly . . . I am truly frustrated about what happened . . . and of course I would like to have done it better.”
Steel tycoon Lakshmi Mittal plans to leave UK after non-dom tax change
Indian businessman would join an exodus of wealthy individuals prompted by Labour’s reform
Steel tycoon Lakshmi Mittal is preparing to leave the UK in response to a government crackdown on non-domiciled residents, making him one of the wealthiest entrepreneurs to move because of the tax reform.
The Indian businessman — who has lived in the UK for three decades — has told associates that his likely departure is in response to the Labour government’s decision to end the “non-dom” regime, which allowed certain UK residents to avoid paying British tax on foreign income and gains.
“He is exploring his options and will take a final decision over the course of this year,” said a friend of Mittal. “There is a good chance he will cease to be a UK tax resident.”
Mittal and his family were listed at number seven in the Sunday Times list of Britain’s wealthiest people last year, with a fortune estimated at £14.9bn.
He owns a vast chalet in the Swiss ski resort of St Moritz, as well as properties elsewhere in Europe, the US and Asia. He has also been buying up property in Dubai, according to people familiar with the situation.
A spokesperson for Mittal declined to comment.
Mittal built his eponymous conglomerate from virtually nothing into the world’s second-largest steel producer over the course of almost five decades. He moved his family to the UK in 1995.
Four years ago, Mittal — a significant donor to the Labour party under former prime minister Sir Tony Blair — stepped back as chief executive of ArcelorMittal, becoming executive chair of the group, which has a market capitalisation of €24bn.
He was replaced by his son Aditya Mittal. The family owns 40 per cent of the company.
The billionaire’s expected departure puts him in the growing ranks of wealthy foreigners leaving Britain in response to Labour’s fiscal crackdown.
They are relocating to tax-friendlier jurisdictions, with countries such as the United Arab Emirates, Italy and Switzerland among the main beneficiaries, according to multiple non-doms and their advisers.
Mittal owns several properties in the UK, including a mansion in Kensington Palace Gardens in London, which was the world’s most expensive home when he bought it from then-Formula 1 boss Bernie Ecclestone for £67mn in 2004.
UK taxpayers who leave the country face constraints on how much time they can spend in Britain. They can usually visit for up to 90 days a year — as long as they work on no more than 30 of those.
Opponents of abolishing the non-dom regime argue that, rather than boosting the UK economy, the resulting exodus of high earners will harm the Britain’s growth prospects. They say that wealthy individuals and their staff boost the UK’s coffers through taxes on income and consumption and many of them are active philanthropists.
The 226-year-old non-dom regime allowed UK residents who declared their permanent home as being overseas to avoid paying British tax on their foreign income.
In March 2024, then Conservative chancellor Jeremy Hunt pre-empted one of the opposition Labour party’s flagship policies by announcing its abolition, ahead of the election later that year.
Labour chancellor Rachel Reeves confirmed the abolition in her October Budget and went further by ending the use of offshore trusts to avoid UK inheritance tax at 40 per cent.
Several non-doms and their advisers said that this change played a big part in their decision to leave.
After Hours Summary: BRZE +9.5% higher on earnings and M&A news; LULU -10.5% and OXM -9.7% fall on weak guidance
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: AGX +11.2%, BRZE +9.5% (also to acquire OfferFit), HROW +7.6%, TMC +4.1% (also to apply for deep-sea mining permits), PLSE +1.9%, AIR +0.5%
Companies trading higher in after hours in reaction to news: CVAC +12.5% (positive validity decision from European Patent Office against BioNTech), KYTX +5.7% (files $250 mln mixed shelf), RKLB +4.2% (awarded $5.6 bln Air Force contract with Stoke Space), CRNX +3.3% Orphan Drug Designation for Paltusotine), SPG +2.5% (opening of Jakarta Outlets in Indonesia), ALLT +2.3% (files $200 mln mixed shelf), PONY +2.2% (license to provide Robotaxi services in Shenzhen's Nanshan District), GME +1.6% (announces pricing of $1.3 bln convertible notes), CVEO +1.5% (repurchase plan for up 10% of total shares), BEAM +0.9% (clearance of investigational NDA), LUMN +0.9% (completes refinancing), SBLK +0.8% (mixed shelf and stock offering), SMCI +0.6% (ships new systems), MEC +0.2% (receives exploration permit)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: LULU -10.5%, OXM -9.7%
Companies trading lower in after hours in reaction to news: RMR -0.7% (files $500 mln mixed shelf), ECX -0.4% (stock offering), SF -0.3% (February operating data), ACCD -0.1% (stockholders approve the merger with Transcarent), ULS -0.1% (expands Songshan Lake IoT Laboratory in China)