Billionaire Adani to Buy Mumbai Airport in Bold Aviation Bet

(Bloomberg) -- Adani Enterprises Ltd. is seeking a controlling stake in Mumbai’s international airport as billionaire Gautam Adani continues his aggressive push into what was until recently the world’s fastest-growing aviation market.

Adani Airport Holdings Ltd. will acquire the debt of GVK Airport Developers Ltd., the holding company of GVK Power & Infrastructure Ltd., according to an exchange filing Monday. Adani will also buy the 23.5% stake held in Mumbai International Airport Ltd. by Airports Co. South Africa and Bidvest Group Ltd., and then work to acquire control.

It’s a high-stakes bet on an industry that’s been brought to its knees by the coronavirus pandemic. The outbreak in India is only gathering pace, sickening more than 78,700 people on Sunday alone, a one-day record. And while budget carriers mushroomed across the South Asian nation as people took to the skies for the first time, poorer economies with rickety infrastructure and a reliance on natural resources have been hit much harder by Covid-19, casting doubt on the ability of consumer-led sectors to quickly bounce back.

Still, the airport in Mumbai, India’s second busiest with 46 million annual passengers in the 12 months through March, has been a prized possession for GVK and it’s fought hard to retain control, even attempting to buy out minority partners to ward off Adani. However high debt levels -- GVK’s airports business had obligations of 57.5 billion rupees ($781 million) as of March 2019 -- and a string of government investigations into financial irregularities mean the group has lost much of its bargaining power.

Adani, meanwhile, has shown his ability to navigate tricky political waters. The 58-year-old billionaire, who’s built his empire around the heavily regulated businesses of coal mining, electricity and ports, has been eyeing a slice of Mumbai airport for several years. This latest move catapults Adani Enterprises into the major league, pitting it against GMR Infrastructure Ltd., which controls the international airport in New Delhi, India’s busiest.

Agreed to Cooperate

Prime Minister Narendra Modi has been seeking private funds to repair and grow the nation’s creaking infrastructure, including its airports. Adani recently won other bids to operate six smaller airline hubs in the country. GVK holds a 50.5% interest in Mumbai international airport, and a 74% share in a second international airport for India’s financial capital that’s under construction.

“The aviation industry has been severely impacted by Covid-19, setting it back by many years and has impacted the financials of Mumbai International Airport,” GVK Chairman GVK Reddy said in a statement. “It was therefore important that we bring in a financially strong investor in the shortest possible time.”

GVK added it had agreed to “cooperate with Adani” and set out various steps in the transaction. They involve Adani acquiring debt from lenders including Goldman Sachs Group Inc. and HDFC Bank Ltd. Adani will be allowed to convert that debt into equity in GVK’s airport business, and will inject funds for the project.

Gautam Adani is India’s fourth-richest man with a net worth of about $16.3 billion, according to the Bloomberg Billionaires Index. A pugnacious dealmaker, his companies maintain a focus on “nation building through infrastructure,” he told Bloomberg News in a rare interview last year.

GMR, which operates airports in Hyderabad and Cebu, is also selling a 49% stake in its airports business to a consortium led by India’s Tata Group, a unit of Singapore’s sovereign wealth fund GIC Pte and SSG Capital Management.

GVK will separately terminate a $1.1 billion investment agreement with Abu Dhabi Investment Authority, the Public Sector Pension Investment Board and National Investment & Infrastructure Fund, it said in another filing.

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