February 5, 2010 / 12:38 AM / 9 years ago

Abu Dhabi wealth fund buys into Gatwick Airport

LONDON/AMSTERDAM (Reuters) - Abu Dhabi Investment Authority (Adia), the world’s largest sovereign wealth fund, said on Friday it had bought a stake in Britain’s Gatwick Airport as it increased its exposure to infrastructure assets.

Sovereign wealth funds are emerging as major investors in infrastructure, alongside pension funds and insurance companies, although opportunities for them can be limited as many governments consider infrastructure to be a strategic sector.

An Adia spokesman said the wealth fund was now a minority shareholder in Gatwick, buying a stake from Global Infrastructure Partners (GIP), but declined to comment on the precise stake and the amount that Adia paid.

Two sources close to the deal said Adia would pay around 125 million pounds ($196.4 million) for a 15 percent stake in Gatwick, confirming an earlier report in The Times newspaper.

A spokesman for Global Infrastructure Partners (GIP), which acquired Gatwick last year for 1.5 billion pounds, declined to comment.

Adia’s investment in London’s second-biggest airport comes two days after South Korea’s National Pension Service said it planned to buy a 12 percent stake in Gatwick for around 100 million pounds.

GIP is a $5.64 billion infrastructure fund set up by Credit Suisse CSGN.VX and General Electric (GE.N). It bought Gatwick last year from BAA, majority owned by Spain’s Ferrovial FER1.MC, for 1.51 billion pounds.

MINORITY STAKES

Adia, believed to have assets of around $500 billion to $700 billion, has a strategy of buying minority stakes in infrastructure assets as a long-term investor.

It has found a favorable investment environment in infrastructure in Britain’s regulatory framework, which is open to foreign investors.

Last month it was reported that Adia had formed a consortium together with a Macquarie (MQG.AX) infrastructure fund and Canada Pension Plan to bid in the sale of French utility EDF’s (EDF.PA) British distribution arm.

Adia has switched its weightings across asset classes to reduce the impact of economic downturns over the past 18 months, with its allocation to global equities averaging 40-60 percent, with 60 percent of that indexed.

Regionally, the wealth fund has its largest allocation in the United States, with 35 to 50 percent, followed by Europe at up to 35 percent and Asia at up to 20 percent.

GIP said on Tuesday that it planned to remain a majority shareholder in Gatwick but sell minority stakes to outside investors.

Editing by Leslie Adler and Rupert Winchester

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