Adani Group keen to buy AAI’s stake in Mumbai airport: Report

Industry:    10 months ago

The Adani Group is considering a bid to acquire the stake held by the Airports Authority of India (AAI) in the Mumbai International Airport, the Mint newspaper reported citing Karan Adani, managing director of Adani Ports and Special Economic Zone (APSEZ). However, the group is not keen to take the state-owned airport operator’s residual share in airports such as Delhi, Bengaluru and Hyderabad.

Adani group will also bid for airports that the government may put up for auctions.

The Adani Group’s strategy is to bid for the Airports Authority of India’s (AAI) stake in the Mumbai International Airport only if it provides them with a controlling stake. This means they are interested in acquiring the Mumbai airport but not other airports. The Adani Group is already a majority stakeholder in Mumbai International Airport Ltd, the company that operates the Mumbai airport.

The Adani Group has been actively bidding for airports recently. Their decision to focus on acquiring AAI’s stake only in the Mumbai International Airport, and not in other private airports, may result in lower revenues for the government from these ventures.

AAI holds a 26% stake in joint ventures that operate the Delhi and Mumbai airports, and owns 13% each in joint ventures that operate the Hyderabad and Bangalore airports. Among these, Delhi and Hyderabad airports have the GMR Group as their largest shareholder, while Fairfax is the largest member in the company that manages the Bangalore airport.

Apart from Mumbai, the Adani Group operates airports in Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati, and Thiruvananthapuram. Except for Mumbai, which was acquired from the GVK Group in 2021, the group won the rights to upgrade and operate the other six airports between 2020 and 2021 for a period of 50 years.

According to the National Monetisation Pipeline (NMP) announced in August 2021, the government plans to privatise a total of 25 AAI airports and sell AAI’s stake in the Delhi, Mumbai, Hyderabad, and Bengaluru airport companies. The Adani Group intends to bid for these 25 airports when they become available.

Previously in an ET report, Karan Adani, the managing director of Adani Ports and Special Economic Zone, mentioned that the group plans to invest ₹60,000 crore in its airport business over the next decade. This investment excludes the ₹18,000 crore already invested in the construction of the first phase of the Navi Mumbai airport.

Investment Details
The proposed investment will cover various aspects of airport infrastructure, including runways, taxiways, aircraft parking stands, terminals, and city-side infrastructure such as hotels and shopping malls. Karan Adani indicated that the investment would be funded through internal accruals.

Anticipated Changes in Air Travel
Adani foresees a significant shift in air travel patterns, stating, “We see these airports becoming major international hubs in the future where international travel will increase exponentially.” He also mentioned plans to enhance direct domestic connectivity in collaboration with airlines, leveraging the group’s network of airports.

Future Plans and Expansion
The Adani Group aims to list its airport business once it becomes profitable. According to Adani Airport Holdings CEO Arun Bansal, it currently operates six airports – Lucknow, Ahmedabad, Jaipur, Guwahati, Thiruvananthapuram, and Mangalore – with Mumbai and the upcoming Navi Mumbai Airport added to its portfolio in 2021. The group is preparing to accommodate 250 to 300 million passengers by 2040, up from approximately 73 million passengers at the seven operational airports.

Industry Growth and Outlook
Bansal also highlighted the potential growth in air travel, noting that only around 300 million Indians are flying out of a population of 1.4 billion. He pointed out that fleet orders placed by airlines indicate a significant increase in the number of planes in the Indian civil aviation fleet, which is expected to rise to 3,000 by 2030.

Investor Interest and Financial Performance
The airport vertical of the Adani Group has garnered investor interest, being positioned as the face of its consumer-oriented business. In the first nine months of FY24, revenue from airports surged by 35% year-on-year to ₹5,748.7 crore, while EBITDA rose by 27% to ₹1,774 crore.

The Adani Group’s strategic investments and ambitious plans reflect its vision to play a pivotal role in the growth and development of India’s aviation sector, positioning itself as a key player in the country’s airport infrastructure landscape.

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