In August 2020, GMR Infrastructure Limited announced that its Board of Directors have approved the separation of its Airport Business from Non-Airport Business.  As Airport business is quite different in terms of risk & rewards and skills sets and capital requirements, there was long standing demand to house the other businesses in other listed company. It was the recent strategic investment which might have compelled management for separation. In this article, we have covered what forced the group to partially sell its crown jewel apart from the details of the transactions, its implications and way ahead for both businesses.

GMR Infrastructure Limited (GIL), a leading global infrastructure conglomerate with interests in Airport, Energy, Transportation and Urban Infrastructure, is listed on Indian Stock Exchanges. GMR Group’s Airport portfolio which is currently held under GMR Airports Limited (GAL) comprising of Airports in New Delhi, Hyderabad, Philippines, Goa and Greece. The Group’s Energy business has a diversified portfolio of around 4,995 MW, of which -3,040 MWs of Coal, Gas and Renewable power plants are operational and around – 1,955 MWs of power projects are under various stages of construction and development. The group also has coal mines in Indonesia, where it has partnered with a large local player. Transportation and Urban Infrastructure division of the Group has four operating highways project spanning over 1,820 lane km.

GMR Power Infra Limited (GPIL) is primarily engaged in the business of setting up, maintaining, operating all types of power plants, co-generation power plants, energy conservation projects, power houses, distribution systems for generation, distribution and supply of electrical energy, power generation by use of liquid, gaseous or solid fuels or through renewable energy sources, establishment and installation of all types of Infrastructure required.

GMR Power and Urban Infra Limited (GPUIL) is a wholly-owned subsidiary of GIL formed for the purpose of this transaction.

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The Transaction

The board has given its approval for the Scheme of Arrangement, which will involve demerger of the Non-Airport businesses (Other Businesses), which includes Energy business, EPC business, Urban Infrastructure business. Post restructuring, GIL will have the airport business while GPUIL will have non-airport businesses.

The structuring will be executed in two steps:

  • Amalgamation of GPIL with GIL
  • Demerger of Non-Airport Business in GPUIL

The restructuring is a step in the direction towards delinking different businesses of the GIL and thereby attracting sector-specific global investors and unlocking value for the current shareholders of GIL. This will also pave the way for focused growth and sustained value creation for all stakeholders over a period.

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The appointed date for the transaction is 1st April 2021.

Swap Ratio

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