MUMBAI: Singapore’s state-run sovereign wealth fund, GIC, has agreed to buy a substantial stake in GMR Infrastructure’s airports holding company, said a person in the know, adding that GIC is likely to have valued GMR Airports at Rs 15,000-16,000 crore.
It wasn’t immediately clear if GIC has partnered with an Indian entity for the acquisition. GIC pipped Japanese diversified conglomerate Mitsubishi — the other entity GMR had been in advanced talks with — to clinch the deal. Funds raised will primarily be used to retire part of GMR’s Rs 20,000 crore net debt. ET had first reported GMR’s talks with the two entities on February 19. A query to a GMR spokesperson remained unanswered as of time of going to press.
After the investment, GIC will be part of GMR’s five key airport projects. It follows GMR’s recent announcement that it would demerge its airports holding company.
India’s infrastructure companies have in recent months been trying to sell shares and retire debt. Spanish conglomerate Ferrovial, Canadian pension fund PSP Investments and UAE-based sovereign fund Abu Dhabi Investment Authority recently submitted final bids for a minority stake in the airports business of GVK Power and Infrastructure, GMR’s rival. GMR’s airports business posted a profit before tax of Rs 365 crore for October-December, against Rs 394 crore a year ago.
The conglomerate has for the last couple of years been making efforts to divest its airport company, including through an initial share sale. It has negotiated with various companies, including the Abu Dhabi Investment Authority (ADIA), for selling a stake in its Hyderabad airport. It has done so even while cautiously bidding for Indian and international airport projects.
The parent company GMR Infrastructure currently owns 91.95% of GMR Airports. It operates airports in Delhi — India’s busiest — and Hyderabad—the fourth busiest.
Last year, GMR agreed to pay Rs 3,560 crore to private equity firms SBI Macquarie, Standard Chartered Private Equity and JM Financial Old Lane in return for their entire holding of compulsorily convertible preference shares in the airport holding company. The PE investors also agreed to acquire a 5.86% stake in the airports company, valuing it at over Rs 20,000 crore, higher than the value GIC is ascribing to the business.
