GMR Infrastructure To Become Pure-Play Airports Company Post Restructuring

GMR Infrastructure Ltd. has received the board’s approval to spin off its non-airport business into a separate entity as it aims to attract sector-specific global investors and unlock value for the current shareholders.

GMR Infrastructure will be a pure-play airports company after the demerger. As part of the restructuring, there will be a vertical split of the non-airport business, including energy, urban infrastructure and others, into GMR Power and Urban Infra Ltd., according to a media statement.

Before the demerger, GMR Power Infra—which is in the business of setting up, maintaining, operating all types of power plants, and is a wholly owned subsidiary of GMR Infra—will be amalgamated with GMR Infra, the statement said.

GMR Power and Urban Infra will have a mirror shareholding. The shareholders will get one share of GMR Power and Urban Infra of Rs 5 face value for every 10 held in GMR Infra each of Re 1 face value.

GMR Infrastructure—which operates the Indira Gandhi International Airport in New Delhi, the Rajiv Gandhi International Airport in Hyderabad, and the Mactan Cebu International Airport in partnership with Megawide in Philippines—will list the non-airport entity separately. Separate listing of both businesses will help in simplifying the corporate holding structure, the statement said.

The consolidated turnover of the demerged entity, according to a filing, accounts for 29.36% of the total turnover of the group. Total turnover of GMR Power and Urban Infra is Rs 2,512 crore in the financial year ended March 2020.

Previously, GMR Infra had proposed either a mirror demerger into airport and non-airport units, or split the business into airport, energy and highways.

Earlier this year, Aéroports de Paris agreed to buy a 49% stake in GMR Airports for Rs 10,780 crore. It has two airports under development via 100% subsidiaries located in Goa and Greece. Besides, the company has received approvals to set up and operate airports in Nagpur, Maharashtra and Bhogapuram, Andhra Pradesh.

"The vertical demerger was a long due event," Rohit Natarajan, associate vice president at Antique Stock Broking, said in an emailed statement to BloombergQuint. With the Aéroports de Paris deal, the valuation for GMR's airport business was reset, and now with the demerger, a pure play on airport exists in the investable space. "The residual entities, too, have some value unlocking possible, and a lot depends on the group strategy ahead."

But the airports arm—that accounts for nearly 60% to the company’s revenue—accounts for half of the net debt of the group. The group's net debt stood at Rs 24,500 crore as of March 2020.