GVK Power & Infrastructure to 49 per cent stake in its airport arm GVK Airport Holdings to ADIA and NIIF
Hyderabad-based power and infrastructure company GVK Power & Infrastructure, which operates the Mumbai International Airport Ltd (MIAL), has offered to sell 49 per cent stake in its airport arm GVK Airport Holdings to sovereign wealth funds Abu Dhabi Investment Authority (ADIA) and the National Investment & Infrastructure Fund (NIIF). The company, did not disclose the value of the deal, but maintained that it will raise capital to refinance debt obligations of up to Rs 5,750 crore.
The stake sale is being seen as a strategy to stave off overtures from Gautam Adani, who had expressed interest to buy the flagship Mumbai airport. In January, Gautam Adani-led Adani Group had reportedly proposed to buy 23.5 per cent stake of two South African firms Bidvest and Airports Company South Africa (ACSA) in the MIAL, according to a report on The Economic Times.
As on December 31, 2018, GVK Group held 50.5 per cent stake in MIAL, while South Africa's Bidvest Group and ACSA owned 13.5 per cent and 10 per cent, respectively. The Airports Authority of India (AAI) owned the remaining 26 per cent.
In February this year, GVKAHL had acquired 10 per cent stake from ACSA along with the earlier acquisition of 13.5 per cent from Bidvest, increasing the equity shareholding of the GVK Group to 74 per cent from the existing 50.5 per cent of the total paid-up share capital of MIAL.
GVK manages and operates the Chhatrapati Shivaji Mumbai International Airport Limited (MIAL) and has also won the mandate to build and operate India's largest Greenfield airport at Navi Mumbai.
"GVK Power & Infrastructure announced that its subsidiaries, GVK Airport Developers (GVKADL) and GVK Airport Holdings (GVKAHL), have signed a term sheet and exclusivity agreement with the ADIA and the NIIF for an investment in new shares in GVKAHL equating to a 49% stake," the company said in a filing to the Bombay Stock Exchange.
GVK Power said the transaction was subject to conclusion of confirmatory due diligence by ADIA and NIIF, agreement on definitive documents and satisfaction of customary closing conditions, including regulatory and third party approvals and lender consents.
Citigroup Global Markets India Private Limited was acting as the exclusive financial advisor to GVK for the transaction.
ADIA and NIIF have been selected as the preferred partners by GVK.
The company intends to use all proceeds from the proposed transaction towards retiring debt obligations.
Commenting on the development, GVK founder and chairman GVK Reddy said, "We are delighted to sign these agreements with ADIA and NIIF. The funds brought in through this proposed transaction will help us deleverage as we continue with our endeavours to create the infrastructure for a strong aviation hub in India that will provide the impetus for growth and development for the entire country. Our future focus will be on delivering Navi Mumbai Internationa Airport, successfully monetising Mumbai airport's real estate and building a strong airports business at GVK."