India’s largest airport operator has decided to separately list its airport business. The company’s board has approved a proposal which will see the holding company GMR Infrastructure demerged into two businesses - airport and non-airport.
The company’s board also approved raising of up to Rs 5,000 crore through the issue of securities.
According to the restructuring process, the non-airport business of GMR Infrastructure Limited(GIL) - energy, urban infrastructure, EPC services - will be moved to GMR Power and Urban Infra Ltd (GPUIL) as a going concern, while GIL will turn into a pure-play airport-owning company. This will be the first airport company to be listed on the Indian stock exchanges.
Post the demerger, shares of GPUIL will be allotted to all the shareholders of GMR Infra with all existing shareholders of GIL becoming shareholders of GPUIL in the same proportionThe scheme envisages issue of one additional share of Rs 5 each of GPUIL for every 10 shares in GIL of Rs 1 each as on April 1, 2021.
Standalone listing of the airport business will help the GMR’s airport business which earns 59.5 percent of the group’s total revenue. Separate listing of both the airport and non-airport businesses will also help in simplifying the corporate holding structure, the management said.
"Over the years, GIL has grown multi-fold and with various divergent businesses housed under one holding structure. Shareholders have been asking us to offer pure play listed vehicles to ride the growth trajectory of matured & scaled-up infrastructure businesses. We have been closely evaluating various options and this is a step in that direction, post the separation of non-airport business,” said Kiran Kumar Grandhi, MD & CEO of GMR Infra.
The other structure that the company evaluated would have converted the company into three different entities - airport, energy and highways.
The GMR Group’s airport portfolio has a capacity of around 172 million passengers in operation and under development, comprising India's busiest Indira Gandhi International Airport in New Delhi, Hyderabad’s Rajiv Gandhi International Airport, Mactan Cebu International Airport in partnership with Megawide in the Philippines while greenfield projects under development includes an airport at Mopa in Goa and another airport at Heraklion, Crete, Greece in partnership with GEK Terna.
GMR Airport recently concluded a deal to sell 49 per cent stake in its airport arm to Paris-based Groupe ADP for an equity consideration of Rs 10,780 crore including earn-outs.
However, the airport business has been heavily impacted by the ongoing coronavirus pandemic with footfalls at airports coming to a near halt due to the lockdown and is recovering very slowly after opening up. Indian airlines have struggled to reach even 35 per cent of pre-Covid traffic levels as flyers are shunning travel due to the quarantine measures imposed by the government and fears of contacting the virus.
The enabling resolution to raise Rs 5,000 crore will help mitigate the impact of the pandemic, said company officials. The fund raising will be done through the issue of securities. Sources said the company is in talks with investment banks to launch a qualified institutional placement (QIP) before the end of this calendar year.