Abu Dhabi Investment Authority, the sovereign wealth fund, is preparing to take a stake of up to 15 per cent in LondonÔÇÖs Gatwick Airport.
The acquisition follows plans by South Korea's National Pension Service, the world's fifth-largest pension fund, to take a 12 per cent stake in the airport.
Gatwick, the UKÔÇÖs second biggest airport, was purchased late last year by Global Infrastructure Partners (GIP), a fund backed by Credit Suisse and General Electric, for ┬ú1.5 billion.
BAA, the previous owner, was forced to sell the airport by competition regulators.
Since it made the purchase, GIP has been looking for long-term investors to buy stakes in Gatwick and is thought likely to sell up to 50 per cent of the equity in the airport.
It is understood that the South Koreans agreed to pay less than £100 million for the 12 per cent stake in Gatwick earlier this week. A deal with Abu Dhabi would likely be completed on similar terms.
Selling the stakes to outside investors will enable Gatwick to make investments and possibly attract airlines from rivals such as Heathrow and Stansted.
The Abu Dhabi fund had previously held talks with a number of potential Gatwick buyers earlier on in the sale process but it decided to step back from taking part in the auction when the airport was put up for sale by BAA.
The wealth fundÔÇÖs other investments include large areas of UK real estate and a stake in Citigroup worth ┬ú4.8 billion. Considered the world's biggest sovereign wealth fund, it is believed to have assets of between $500 billion to $700 billion.
However, the credit crunch saw the fund suffer large losses on its investment in Citigroup, after which it filed an arbitration claim against the bank. It also suffered losses on several private equity investments.
It is thought the purchase of the Gatwick stake is an attempt by the fund to go some way towards gaining lost ground.
GIP, which also owns London City airport, is a £3.6 billion infrastructure fund sponsored by Credit Suisse and General Electric.
It is understood to be in talks with several other potential investors but none of these are thought to be close to agreeing a deal.
Passenger numbers at Gatwick rose for a third consecutive month in December. Its full-year decline was 5.3 per cent.
