MUMBAI: The GVK and GMR corporations, which have become nationally known after receiving modernization contracts for India's two largest airports, are in the final stages of sales – in separate deals – each holding at least a quarter of the holding companies in Mumbai and Delhi With a total value of about $ 1 billion.

GVK Power and Infrastructure, which operates Mumbai Airport and GMR Infrastructure, which operates Delhi Airport, is designed to unload large portions of the companies, several sources with direct knowledge of the matter told ET.

Australian infrastructure investor AMP Capital, in advanced discussions with GVK, is to receive a strategic stake in the airport holding company at a valuation of approximately Rs. 3,000-3,500. LoneStar, a long-term investor with Texas Headquarters, is currently negotiating with the intention of investing in the GMR airport holding company, with a valuation of approximately Rp 4,500 billion, said the above persons.

Citigroup leads the sale for GVK and Morgan Stanley for GMR, they said.

Both groups are burdened with debt and are looking for funds to meet their repayment obligations. The total debt of GVK Power amounted to Rs. 12,855bn in the financial year 18, while the net debt of GMR was around Rs. 4,600bn.

GVK operates the country's second largest airport in Mumbai and has development rights for a new airport on the outskirts of the city. GVK holds a 50.5 percent stake in Mumbai International Airport Ltd (MIAL), which owns 74 percent of Navi Mumbai Airport Pvt. Ltd. The transaction could include primary and secondary sales, as South Africa's Bidvest, which holds a 13.5 percent stake, also wants to sell its shares. A preliminary agreement is expected to be signed before Diwali, which is in early November, said one of the above sources.

AMP Capital declined to comment. "We do not comment on rumors or speculation in the market … If something changes, I'll let you know." GVK and Lone Star did not respond to questions, while GMR refused to comment.

If successful, the transaction will mark GVK's second share sale in the vertical position of the airport. The company sold its majority stake in Bangalore International Airport Ltd. (BIAL) in 2016 and 2017 in two tranches for about 3,500 billion rupees to the Canadian Fairfax. The company had a 43 percent stake in BIAL.

The airport in Mumbai handled 48.50 million passengers in 2017-18 and holds the record to be the world's busiest single-runway airport.

GVK, GMR in conversation with unloading stacks

Sydney-based AMP Capital, which manages AUD187.7bn, is a major global investor in infrastructure assets. Airport holdings include Melbourne and Launceston in Australia and Leeds Bradford and Newcastle in the UK. The company invests in Reliance Rail and the energy company SGEL in India.

GMR controls airports in Delhi, the busiest in the country, and Hyderabad. It owns or operates assets in the Philippines, Goa and Greece. Delhi Airport serves 57.7 million passengers a year, while Hyderabad handles 15.2 million passengers. In Goa, which already has an airport operated by the Indian Navy, GMR will begin construction of a rupee facility worth 3,000 kroner in January. GMR is also working with Greek infrastructure company Terna SA to develop a new international airport in Heraklion, Crete.

The company has started the process for an initial public offer (IPO) of the airport holding unit. If this continues, Lone Star will likely invest before the IPO.

Headquartered in Dallas, Texas, Lone Star is known for buying troubled assets worldwide. It has spent $ 180 billion on operations, real estate, stocks, credit and other financial assets over the last two decades.

Investor interest in Indian airports is based on forecasts for traffic growth. Domestic air traffic grew 20 percent, while international traffic in FY18 grew 12 percent, according to the Center for Asia Pacific Aviation (CAPA).

Domestic passenger traffic is expected to grow to 125 million by March, growing by 18-20 percent by March and holding at 150 million by March 2019, according to a forecast by CAPA.



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