The Reddy’s, founder promoters of GVK, have reached out to Sajjan Jindal led JSW Group with an offer to sell their controlling stakes in their crown jewels – the two airports in Mumbai and Bangalore. Sanjay Reddy, the group’s vice-chairman had recently met Jindal to discuss the matter according to people familiar with the developments. Reddy is also the managing director of Mumbai International Airport Ltd (MIAL). The choice of Jindal – with no prior experience in the field – as a potential suitor has come as a surprise to most corporate peers and sector specialists. GVK – among the most indebted infrastructure conglomerates in the country with Rs 26,500 crore net group debt in FY15 – has been exploring several strategic options which included listing its airport vertical or sell a minority 49 per cent at its airport holding company to investors or even an outright sale of its economic interests in the Bangalore airport for months. Last year it even mandated investment banks Bank of America Merrill Lynch and Goldman Sachs for the exercise that would have helped retire Rs 3500 crore debt in the vertical and prune group operations, already hobbled with coal-mine acquisition debt and low profitability of its power plants. GVK’s airport segment clocked revenues of Rs.2459.42 crore in FY15 or 80.65 per cent of the group’s total income. As per investment banking sources, the feelers to Jindal come at a time when the company has also received competing proposals from a diverse set of candidates including German airport AviAlliance, Singapore’s Changi, IDFC Private Equity while a consortium of investors led by the family office of a Bangalore based tech businessman and philanthropist is also believed to have shown interest for the Bangalore asset. But GVK’s proposal to JSW involves a complete sale.
Source: Economic TimesDebt-riddled GVK reaches out to JSW Group for sale of its Mumbai and Bengaluru airports.
Industry: Infrastructure 2016-02-25