The GVK group is planning to sell a minority stake in its airports holding company and has held talks with several global investors including Qatar Investment Authority (QIA), AMP Capital and Global Infrastructure Partners as well as Canada Pension Plan Investment Board, three people close to the development said.
GVK via GVK Airport Holding owns 50.5% in the Mumbai International Airport Ltd. (MIAL), the consortium that runs the existing airport in Mumbai and which has won the bid for developing a new Rs 16,000 crore airport in Navi Mumbai. MIAL’s other stakeholders are Airports Company South Africa (10%), Bidvest (13.5%) and the state-run Airports Authority of India (26%). Talks for a stake sale at GVK Airport Holding have been on for several months and a deal should be a concluded before the end of the year, said the second person.
Citi group has the mandate for managing the deal, said the third. The new investor would have a holding in both the downstream airport assets, said one of the people cited above.
Mumbai airport is India’s second busiest and also its most congested. It handled 48.50 million passengers in 2017-18 and holds the record for being the world’s busiest single-runway airport.
The Navi Mumbai airport is seen as an imperative alternative to the saturated existing airport. It will be built on 1,160 hectares in phases and will eventually cater to 60 million passengers per year. The initial concession period is 30 years from the appointed date and is extendable for a further 10 years.
GVK recently announced financial closure for the project. The funds will be primarily used for GVK’s planned investment in Navi Mumbai in which MIAL holds 74% stake.
The second stake sale, after Bengaluru airport, signifies GVK’s pressing need to raise funds, given that the airports business is still its biggest money spinner and profit generator. GVK last FY almost trebled its profit before taxes and interest in the airports segment to Rs 593.54 crore. Revenue grew 10% to Rs 3,423 crore. The profit (ex taxes and interest) from the airport’s segment accounted for 82% of all segments combined while revenue was 88%.
GVK has over the last few years approached several investors for the airports business, including US buyouts firm TPG Capital, Singaporean sovereign fund Temasek, Canada’s CPP Investment Board and Fairfax. Earlier this year, the company made alternate plans to raise $1billion through an issuance of dollar bonds. That hasn’t fructified.
