Fairfax Financial Holdings Ltd, controlled by Canadian billionaire Prem Watsa, plans to sell its entire stake in Bangalore International Airport Ltd (BIAL) for at least $1.5 billion, two people familiar with the matter said.
Fairfax has infused about $1 billion into BIAL, making it the billionaire’s largest investment in India.
“A premium of 40-50% is expected because air passenger traffic is set to increase, and the airport is now capable of accommodating a much larger number of flights and passengers with ease,” one of the two people cited above said, requesting anonymity.
If completed, the stake sale will be the largest exit deal by Fairfax in India.
Emails sent to spokespeople for Fairfax and BIAL, which runs Bengaluru’s Kempegowda International Airport, remained unanswered.
“The planned stake sale may be done in tranches with a valuation of $2.5-3 billion for the international airport. And long-term strategic players or corporates will be preferred to be the new owners. There may be a few small investors, but that will be additional,” the first person said.
Fairfax owns around 54% of BIAL, while Siemens Project Ventures GmbH holds 20%, Airports Authority of India 13% and Karnataka State Industrial and Infrastructure Development Corp. 13%.
On 29 June, Bengaluru airport said it achieved a significant milestone by crossing the 250 million passenger mark since the launch of its operations or Airport Opening Day.
“The addition of new carriers in conjunction with the introduction of new routes and rising passenger numbers on existing routes has led to this noteworthy accomplishment. While the pandemic has meant that traffic growth over the past two years has been slower than usual, BLR Airport has historically grown very fast, as evidenced by how quickly the airport has reached some of these milestones,” BIAL said in a release.
Fairfax has already initiated talks with strategic investors, the people cited above said.
In March 2021, Fairfax chairman Watsa said infrastructure was being created to enable BIAL to handle over 90 million passengers by 2034. For this expansion, a total investment of about $2.2 billion is required.
“This investment has not been fully done yet. That’s another reason deep-pocketed players or corporates will have a better chance of coming in as the new majority stakeholder in Bengaluru International Airport by purchasing a stake from Fairfax,” said the first person.
Bengaluru International Airport, the third busiest airport in India, has the exclusive rights to carry out the development, design, financing, construction, commissioning, maintenance, operations and management of the airport until 2038 under a concession agreement with the central government.
Fairfax became the controlling shareholder of the airport by buying a 33% stake for $321 million from GVK Power and Infrastructure in 2016. It subsequently purchased an additional 5% from Zurich Airport. Later in 2017, GVK exited the airport by selling its residual 10% to reduce debt.
In March 2018, Fairfax India Holdings bought an additional 6% stake from Siemens Project Ventures GmbH for about $67 million to become the majority owner of the airport with a 54% stake.
With Fairfax planning to sell its stake, it is uncertain whether the company will revive the process to list its flagship airports investment firm Anchorage Infrastructure Investment Holding Ltd on the Indian stock exchanges.
Last year, Fairfax announced its intention to launch an IPO for Anchorage Infrastructure, but has yet to file the draft IPO documents with the markets regulator.
Fairfax’s stake sale plan could be a part of Fairfax’s larger India consolidation strategy, and in line with Watsa’s firms’ stake sales in other Indian firms over the past year, according to the people cited above.
In December 2021, Fairfax Group’s Hamblin Watsa Investment Counsel (HWIC) Asia Fund offloaded IIFL Finance Ltd’s shares worth over ₹180 crore through an open market transaction and subsequently exited IIFL Finance by selling its entire 7.48% stake. FIH Mauritius Investments, another unit of Fairfax, now owns 22.3% of IIFL Finance.
In the December quarter of 2021, HWIC Asia Fund sold its entire 4.58% stake in IIFL Wealth Management Ltd.
FIH Mauritius Investments holds a 13.61% stake in IIFL Wealth Management Ltd now.
On 16 September, Mint reported that Fairfax is looking to sell a majority stake in Fairchem Organics Ltd, for which Bank of America (BofA) has been hired as an adviser. Fairfax, through FIH Mauritius Investments, holds a 52.8% stake in the specialty chemicals firm.
Fairfax Financial Holdings Ltd, through FIH Mauritius Investments Ltd, holds a 49.72% stake as a promoter in CSB Bank Ltd.
Fairfax, through FAL Corp., also holds 45% in Go Digit Infoworks Services Ltd, the largest co-promoter of cricketer Virat Kohli-backed Go Digit General Insurance, whose ₹1,250 crore IPO plan has been delayed due to volatile markets.
Fairfax is also a key shareholder of the National Stock Exchange (NSE) and Thomas Cook India.
