Mumbai, March 28: Prem Watsa's Fairfax India Holdings Corporation and Fairfax Financial Holdings Ltd are acquiring 33 per cent in Bangalore International Airport Ltd (BIAL) from GVK Power & Infrastructure Ltd for Rs 2,149 crore.
The GVK group will use the proceeds to trim its debt.
"Upon the completion of this transaction, there would be a reduction of a debt burden of around Rs 2,000 crore and it would also result in saving of interest cost to the extent of approximately Rs 300 crore per annum. The transaction is subject to customary closing conditions and third party consents, including lender consents, and is expected to be completed by the middle of 2016," GVK said in a filing with the bourses today.
The announcement led to the shares of GVK Power & Infrastructure surging 6.43 per cent to Rs 7.12.
In BIAL, GVK Group holds 43 per cent, Siemens Project Ventures GmbH 26 per cent and Flughafen Zurich AG Ltd 5 per cent, while state-owned entities Airports Authority of India (AAI) and Karnataka State Industrial Investment & Development Corporation Ltd (KSIIDC) hold 13 per cent each.
In November 2009, GVK had acquired a 12 per cent stake in BIAL from Zurich Airport for Rs 484.6 crore. The acquisition was done through the company's wholly owned subsidiary GVK Airport Developers Pvt Ltd.
Next month, it acquired 17 per cent from Larsen & Toubro (L&T) for Rs 686 crore. In 2011, it picked up another 14 per cent from its partner Siemens Project Ventures for Rs 620 crore, to become the largest stakeholder with a 43 per cent stake. Following the deal, Siemens's holding came down to 26 per cent.
The latest transaction will bring down GVK's stake in BIAL to nearly 10 per cent.
Last year, GVK Airport Developers had initiated a financing process to reduce its debt obligations. The infrastructure company selected the Fairfax group from the multiple offers it received.
"This is an important and successful milestone in deleveraging our balance sheet, and all proceeds from this stake sale shall be used to bring down our debt obligations to our lenders. We chose Fairfax as a partner in BIAL as we have a long-standing relationship with its chairman Prem Watsa and we would look forward to partnering with them in developing Kempegowda International Airport through its next stage of expansion as we develop a new world-class Terminal 2 and a new runway," GVK Reddy, founder chairman and managing director of GVK, said.
Fairfax India chairman Prem Watsa said it would work closely with all stakeholders to manage the stake in BIAL. G.V. Sanjay Reddy will continue to lead the management team as the managing director of BIAL and G.V.K. Reddy will remain the co-chairman, he added.
BIAL owns and operates the Kempegowda International Airport, Bangalore, under a concession agreement from the Centre.
