GVK In Talks To Sell Stake In Airport Business To Pare Debt

GVK Power and Infrastructure Ltd. said it is in talks to sell 49 percent stake in its two subsidiaries to Abu Dhabi Investment Authority and National Investment & Infrastructure Fund as the operator of Mumbai and Hyderabad airport looks to pare debt.

The two subsidiaries—GVK Airports Developers Ltd. and GVK Airport Holdings Ltd.—have signed a “term sheet and exclusivity agreement” with the ADIA and the NIIF, according to its stock exchange filing. The transaction is subject to due diligence by the two investors, it said.

GVK, which operates Mumbai’s Chhatrapati Shivaji International Airport, has selected the two investors as its preferred partners to raise funds and reduce debt of up to Rs 5,750 crore, the filing said. “All proceeds from the proposed transaction will be used by GVK towards retiring debt obligations.”

“The funds brought in through this proposed transaction will help us deleverage as we continue with our endeavours to create the infrastructure for a strong aviation hub in India that will provide the impetus for growth and development for the entire country,” GVK’s Founder and Chairman GVK Reddy said. “Our future focus will be on delivering Navi Mumbai International Airport, successfully monetising Mumbai airport's real estate and building a strong airports business at GVK.”

Citigroup Global Markets India Pvt. Ltd. will act as the financial advisor for the deal.

In last year’s annual meeting, shareholders had given their approval to dilute equity stake in the two subsidiaries and use the money to repay debt. That was also not GVK’s first attempt to reduce its debt pile. In 2017, it exited from Bengaluru International Airport Ltd. by selling 43 percent stake to Prem Watsa’s Fairfax India Holdings for about Rs 3,500 crore.

As per media reports, earlier this year the Adani Group had offered to acquire a stake in Mumbai Airport International Ltd., where GVK held 50.5 percent then. In an attempt to thwart that sale, GVK bought an additional 23.5 percent stake.

The stock closed 3.4 percent lower ahead of the announcement.