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AMP capital in final talks to buy stake in GVK’s airport business

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MUMBAI: The GVK and GMR groups, which rose to national prominence after winning modernisation contracts for India’s two biggest airports, are in the final stages of selling — in separate deals — at least a fourth stake each in the holding companies that operate the Mumbai and Delhi facilities with a combined value of around $1 billion. GVK Power and Infrastructure, which runs Mumbai airport and GMR Infrastructure, which runs Delhi airport, are set to offload significant stakes in the entities, multiple sources with direct knowledge of the matter told ET. Australian infrastructure investor AMP Capital is said to be in advanced talks with GVK to pick up a strategic stake in the airport holding company at a valuation of about Rupees 3,000-3,500 crore.

LoneStar, a Texasheadquartered, long-term investor is negotiating to invest in GMR’s airport holding entity at a valuation of about Rupees 4,500 crore, said the people cited above. Citigroup is managing the sale for GVK and Morgan Stanley for GMR, they said. Both groups are laden with debt and have been on a quest to raise funds to meet repayment obligations.

GVK Power’s total debt stood at Rupees 12,855 crore in FY18, while GMR’s net debt is about Rupees 4,600 crore. GVK operates the country’s second-busiest airport in Mumbai and has development rights for a new airport in the city’s outskirts.

GVK holds a 50.5 per cent stake in Mumbai International Airport Ltd (MIAL), which owns 74 per cent of Navi Mumbai Airport Pvt.

The deal could involve primary and secondary sales as South Africa’s Bidvest, which holds a 13.5 per cent stake, is also looking to sell its shares.

A preliminary agreement is expected to be signed before Diwali, which is in early November, said one of the sources mentioned above. AMP Capital declined to comment.

“We don’t comment on market rumour or speculation… If there’s any change to that I’ll be sure to let you know.” GVK and Lone Star didn’t respond to queries, while GMR declined to comment. If successful, the transaction will mark GVK’s second stake sale in the airport vertical.

The firm sold its controlling stake in Bangalore International Airport Ltd (BIAL) to Canada’s Fairfax for about Rupees 3,500 crore in two tranches in 2016 and 2017.

The firm had a 43 per cent stake in BIAL. Mumbai airport handled 48.50 million passengers in 2017-18 and holds the record for being the world’s busiest single-runway airport. GVK, GMR in Talks to Offload Stakes Sydney-headquartered AMP Capital, which manages A$187.7 billion, is a key global investor in infrastructure assets.

Its airport holdings include Melbourne and Launceston in Australia, and Leeds Bradford and Newcastle in the UK.

It has investments in Reliance Rail and power generation company SGEL in India. GMR controls airports in Delhi, the country’s busiest, and Hyderabad.

It owns or operates assets in the Philippines, Goa and Greece.

Delhi airport handles about 57.7 million passengers annually, while Hyderabad handles 15.2 million.

In Goa, which already has an airport run by the Indian Navy, GMR is set to start building a Rupees 3,000-crore facility in January.

GMR is also partnering Greek infrastructure major Terna SA to develop a new international airport at Heraklion in Crete. The firm has begun the process for an initial public offer (IPO) of the airport holding entity.

If that goes ahead, Lone Star’s investment will likely be pre-IPO funding. Headquartered in Dallas, Texas, Lone Star is known for buying out distressed assets globally.

It has struck deals worth $180 billion in operating companies, real estate, equity, credit and other financial assets in the last two decades. Investor interest in India’s airports is based on traffic growth projections.

Domestic passenger traffic grew 20 per cent, while international traffic grew 12 per cent in FY18, Centre for Asia Pacific Aviation (CAPA) said. According to a projection by CAPA, domestic passenger volumes are poised to touch 125 million by March, growing 18-20 per cent, and may maintain that pace to reach the 150 million mark by March 2019.




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