Tatas enter airports
The company said it would retain management control over the airports business. The new investors will have the customary rights and board representation at GMR Airports and its key subsidiaries.
The transaction values the airport operations at Rs 18,000 crore. GMR will earn another Rs 4,475 crore subject to the airport business meeting targets over the next five years.
GMR Infrastructure said the deal intended to provide an exit route to existing private equity investors, who hold around 5.8 per cent in GMR Airports.
GMR group’s airport business handles 16 crore passengers a year. It manages the Indira Gandhi International Airport in New Delhi, Hyderabad’s Rajiv Gandhi International Airport, Mactan Cebu International Airport in partnership with Megawide in the Philippines. Greenfield projects under development include an airport at Mopa in Goa and one at Heraklion, Crete, Greece in partnership with GEK Terna.
According to GMR Infrastructure, the deal gives them sufficient funds to repay Rs 7,000 crore of its own debts and another Rs 1,000 crore owed by GMR Airports. Following the transaction, the consolidated debt at GMR Infra will reduce to Rs 12,000 crore.
“The proposed investment endorses the strength of the unparalleled airport platform created by GMR Group and will reduce our debt substantially, strengthening our balance sheet,” Grandhi Kiran Kumar, managing director & chief executive officer of GMR Infrastructure, said while commenting on the investment.
The Tatas on Wednesday ventured into airports when it teamed up with an affiliate of Singapore’s sovereign wealth fund GIC and SSG Capital Management (SSG) to pick up a stake in the airport business of GMR Infrastructure.
The consortium will invest Rs 8,000 crore in GMR Airports — a Rs 1,000-crore equity infusion in GMR Airports and Rs 7,000 crore towards the purchase of GMR Airports’ shares from GMR Infrastructure and its arms.
After the transaction, GMR Infra and its subsidiaries will hold around a 54 per cent stake in GMR Airports, while the Tatas will hold 20 per cent. GIC will hold 15 per cent, SSG Capital 10 per cent and an employee’s body of GMR Airports, the rest. The Tata group will invest Rs 3,560 crore, GIC will chip in with Rs 2,670 crore and SSG Capital, Rs 1,780 crore.
The deals marks the entry of the Tatas into the airport sector, and comes on the heels of the Adani group entering the business when it emerged the top bidder to operate six airports.
In a statement, GMR Infrastructure said it would now demerge its energy, highways, urban infrastructure & transportation businesses from airports.