Saudi wealth fund to get airports by mid-2018 in a privatisation drive

dubai — Saudi Arabia will transfer airports to its sovereign wealth fund by mid-2018, as part of a nationwide privatisation drive spurred by low oil prices.

Airports will be turned into companies before being handed over to the Public Investment Fund, to help improve accountability, Faisal Al Sugair, chairman of Saudi Civil Aviation Holding Co, said in a phone interview. The transfer will also boost oversight as the General Authority of Civil Authority will no longer be both an operator and regulator, he said.

The kingdom aims to win investment in airports as its seeks to revive an aviation industry. It’s also looking at privatising seaports as depressed crude prices weigh on state spending plans.

The wealth fund will take over Saudi Civil Aviation Holding, which will act as an umbrella company for the airport operators, Al Sugair said. The holding company will be worth “billions of dollars,” he said.

Airport stakes will be sold off when the operating companies have become stabilised, which could be before they are handed over to the wealth fund, Al Sugair said. A variety of privatisation options are under consideration, including initial public offerings and private stake sales, he said. Different airports may be sold in different ways, and the government is yet to decide what stakes it will retain, he said. PricewaterhouseCoopers and Ernst & Young are advising on the sale process and on turning operators into companies.

The eventual sales may be hampered by “a very bearish market,” Al Sugair said. “I wouldn’t be surprised if you get less interest — if you don’t get very good bids because of the situation in the market,” he said. That could lead to sales being re-tendered or postponed, he said. — Bloomberg