GMR, the Delhi-headquartered diversified conglomerate that is present in the airport, energy and highway segments, is now evaluating the launch of a qualified institutional placement to reduce debt as the board meets on August 27, according to sources.
Diversified conglomerate GMR Infra, which recently completed the sale of a 49 percent stake in its airport business to France’s Groupe ADP, is back on the hunt for funds.
The Delhi-headquartered firm that is present in the airport, energy and highway segments is now evaluating the launch of a qualified institutional placement (QIP) to reduce the debt on its balance sheet, people with knowledge of the matter told Moneycontrol.
“Preliminary discussions have been initiated with investment bankers and as of now, the plan is to raise between Rs 2,000 to Rs 3,000 crore,” said one of the persons cited above. This person warned that the final quantum or deal size may change depending on the feedback from investors and the appetite in the market.
“GMR Infra is planning to launch the proposed QIP in October 2020 and roadshows are likely to start next week. The fundraise will be discussed in today’s week’s board meeting,” said a second person.
Earlier this week, GMR Infra disclosed to the stock exchanges that its board will meet on August 27, 2020 and “consider raising of funds of up to Rs 5000 crore in one or more tranche(s), through issue of securities as an enabling resolution as per the requirements of applicable laws which shall be subject to approval of shareholders”.
“COVID-19 has impacted the main airport business of GMR Infra and since revenues are lower, they want to reduce interest costs through this proposed fund raise. The internal restructuring, announced earlier, process will proceed simultaneously,” added a third source.
Also Read: GMR receives Rs 5,248 cr from Groupe ADP
All the three individuals spoke to Moneycontrol on the condition of anonymity.
When contacted, a GMR Infra spokesperson said, “We do not comment on rumours and speculation”.
GMR Infra had a m-cap of around Rs 15,600 crore at the end of days trade on August 26. The promoters hold a 54.78 percent stake and the group’s net debt at the end of December 2019 stood at around Rs 25,600 crore, according to reports.
GMR Infra: The Revival Strategy
In February 2019, GMR Infra announced plans for a vertical demerger as part of which the airports business would be separated from the other segments. The intention is a pure play focus for each vertical involving a listing/separate fund raise in order to unlock maximum value for shareholders.
The management has also been taking steps to pare the group’s debt burden. In February, 2020, the group said Groupe ADP would acquire a 49% stake in the airport arm for ₹10,780 crore. Earlier this year, it announced the sale of its stake in the coal-fired Kamalanga power project for ₹5,320 crore.
GMR operates the Indira Gandhi International Airport in New Delhi, Hyderabad's Rajiv Gandhi International Airport and Mactan Cebu International Airport in partnership with Megawide in Philippines.
Also Read: GMR Infra to seek shareholders' nod for minority stake sale in airport biz
Its consolidated net loss for the quarter ended March 31 narrowed to Rs 1,126.82 crore against Rs 2,341.24 crore loss in the January-March period in FY19. The consolidated total income for the quarter under discussion was at Rs 2,554.21 crore as compared to Rs 2293 crore in Q4FY19.
Revenues from the airports segment stood at Rs 1,582.49 crore against Rs 1,389.58 crore in the fourth quarter of FY19, while the power vertical garnered Rs 310.28 crore against Rs 220.41 crore in Q4FY19.
With respect to the impact of the COVID-19 on the business of these entities, GMR believes it may impact the businesses in the short term and does not anticipate medium to long term risk to the business prospects.