Qatar Investment Authority secures majority stake in IAG

Qatar Airlines has announced that it has purchased a 9.99% stake in IAG, the airline conglomerate which was formed from the merger of British Airways and Spain´s Iberia Airlines. Qatar Airlines, which is controlled and owned by the Qatar Investment Authority, is seeking to exert greater influence in the aviation industry. The deal will make the Qatari´s the majority shareholder in IAG, with a reputed investment in excess of €1.5 bn.

The latest move comes as IAG holds talks with Irish carrier Aer Lingus over a possible takeover deal. IAG were unable to provide comment when contacted by The Corner, but CEO Willie Walsh told the IAG website: “We´re delighted to have Qatar Airways, one of the world´s premier airlines, as a long term supportive shareholder. We will talk to them about what opportunities exist to work more closely together and further IAG´s ambitions as the leading global airline group”.

The Qatari Investment Authority has been consistently boosting its stake in Spanish companies since the onset of the crisis. The middle-eastern sovereign wealth fund has paid over €2bn in total for a 9.52% stake in energy firm Iberdrola. The group also owns a 5% in the Brazilian strand of Santander bank, which was purchased for in excess of $2 billion in 2010.

QIA has increased its investment to €2.02 billion in Inmobilaria Colonial for a 13.1% stake, while it has also purchased the Hotel W facility in Barcelona for €200 million.

Javier Capapé, a researcher at ESADE Centre for Global Economy and Geopolitics, says the deal makes sense for both IAG and the Qatari’s: “For IAG it offers financial support-they are already bidding for Air Lingus in Ireland- but mostly, it opens doors for enhanced relationships and connections with the Gulf and the door to India and East Asia.”

The deal is further evidence of Qatar’s desire to own notable entities on a global scale according to Mr Capapé: “They have strong ties with the UK since they established the fund in 2005. They already own Harrods, have financed the tallest building in Europe (The Shard) and on Wednesday it was announced that they will buy Canary Wharf in London.”

The desire to complete deals of this nature underline a certain level of competitiveness amongst oil-rich gulf states, particularly within the aviation industry: “They need to compete with their neighbours in the Gulf: Etihad and Emirates. In general, the UAE was doing a better job in positioning the country as an aerospace hub. Again, a “fancy” deal will help to project the image of the country in Europe and all over the world. Qatar Holdings already owns 20% of BAA, which operates Heathrow,” added Mr Capapé.

From a Spanish point of view, Mr Capapé sees the country as naturally attractive for funds like QIA. “In the case of Iberdrola or Santander Brazil, Spanish companies offer the maturity of a European stock market combined with the exposure to the growth of emerging markets in Latin America.”

 

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