GVK Power & Infrastructure Limited, last week late Thursday (18 April) said, it has signed an agreement to sell 49% stake in its airports business to Abu Dhabi Investment Authority (ADIA) and India’s National Investment and Infrastructure Fund (NIIF).
In a stock exchange filing on Thursday GVK said, according to the term sheet, ADIA and NIIF would invest in GVK Airport Developers Limited (GVKADL) and GVK Airport Holdings Limited (GVKAHL) by acquiring new shares. The company did not disclose the financial terms or how many fresh shares would be issued. The company further said, it was looking to raise funds to reduce or refinance debt obligations of up to INR 57.5bn (USD 864m). “All proceeds from the proposed transaction will be used by GVK towards retiring debt obligations,” the parent company said in a statement.
Citigroup Global Markets India Private Limited was the financial advisor for the transaction.
Dr. GVK Reddy, founder and Chairman, GVK, said, “The funds brought in through this proposed transaction will help us deleverage… our future focus will be on delivering Navi Mumbai International Airport, successfully monetising Mumbai airport’s real estate and building a strong airports business at GVK.”
The decision to bring in two new equity partners comes at a time when GVKAHL’s attempt to increase its shareholding in its Mumbai International Airport Limited (MIAL) has escalated into a legal battle with its existing equity partner, Bid Services Division (Mauritius) Limited, (Bidvest). Under the terms of the shareholder agreement, GVKAHL, who has right of first refusal (ROFR) on Bidvest’s stake in MIAL, filed an injunction in the Delhi High Court on 2 April, stopping the latter from selling its 13.5% stake to a third party.
At a hearing on 11 April, counsel for Bidvest informed the High Court that the company cannot wait till 30 September, which GVK wants as the last date for purchasing its shares. Inframation reported on 18 April, GVK and Bidvest have failed to arrive at an out-of-Court settlement.
MIAL is the special purpose vehicle that operates the airport in India’s financial capital and is a joint venture of GVK, Bidvest and Airports Company South Africa (ACSA) Global Limited. GVK owns 50.5% of MIAL while Bidvest owns 13.5% and ACSA Global has 10%. Airports Authority of India (AAI) owns 26%. MIAL also has the contract to develop the Navi Mumbai International Limited.
The GVK-led consortium has been running Mumbai airport since 2006 and is also building the second one in Navi Mumbai. MIAL owns 74% of this proposed airport while the rest is held by local nodal body City and Industrial Development Corporation (CIDCO).