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GVK Power and Infrastructure, which operates the Mumbai airport and GMR Infrastructure, which manages the Delhi airport, is expected to transfer significant shares to the ET entities, with multiple sources having direct knowledge of the issue.
The Australian infrastructure investor AMP Capital would be in advanced talks with GVK to take a strategic stake in the airport holding company at a value of about 3,000 to 3,500 crore rupees. LoneStar, a Texashead-based long-term investor, is negotiating to invest in GMR's airport holding company to a value of about 4,500 rupees, said the population cited above.
Citigroup manages the sale of GVK and Morgan Stanley for GMR, they said.
Both groups are in debt and have sought to raise funds to meet repayment obligations. GVK Power's total debt was 12,855 million rupees in FY18, while GMR's net debt was approximately 4,600 million rupees.
GVK operates the country's second busiest airport in Mumbai and has development rights for a new airport in the suburbs of the city. GVK holds a 50.5% stake in Mumbai International Airport Ltd. (MIAL), which owns 74% of Navi Mumbai Airport Pvt. The deal could involve primary and secondary sales, as Bidvest in South Africa, which holds a 13.5% stake, is also looking to sell its shares. A preliminary agreement is expected to be signed before Diwali in early November, said one of the sources mentioned above.
AMP Capital declined to comment. "We do not comment on rumors or speculation in the market … If there is a change to make, I assure you that we will let you know." GVK and Lone Star did not answer questions , while GMR refused
If successful, the transaction will mark the second sale of GVK in the vertical airport. The company sold its majority stake in Bangalore International Airport Ltd. (BIAL) to Fairfax in Canada for approximately Rs.5,500 in two tranches in 2016 and 2017. The company held a 43% interest in BIAL.
Mumbai Airport handled 48.50 million passengers in 2017-2018 and holds the record for the busiest airport in the world.
GVK, GMR in talks to unload the stakes
Sydney-based AMP Capital, which manages $ 187.7 billion, is a major global investor in infrastructure. Melbourne and Launceston, Australia, and Leeds Bradford and Newcastle, UK, are among its airports. It has investments in Reliance Rail and the power generation company SGEL in India.
GMR controls the airports of Delhi, the busiest in the country, and Hyderabad. It owns or operates assets in the Philippines, Goa and Greece. The Delhi airport receives about 57.7 million passengers a year, while Hyderabad receives 15.2 million passengers a year. In Goa, which already has an Indian-run airport, GMR is expected to start building a 3000 Rupee facility in January. GMR is also partnering with Terna SA, the Greek infrastructure, to develop a new international airport in Heraklion, Crete.
The company has begun the process of initial public offering (IPO) of the airport holding company. If this materializes, Lone Star's investment will likely be pre-IPO.
Headquartered in Dallas, Texas, Lone Star is known for buying troubled assets globally. Over the past two decades, it has entered into $ 180 billion deals in operating companies, real estate, equities, credit and other financial assets.
Investor interest in Indian airports is based on projections of traffic growth. Domestic passenger traffic increased by 20%, while international traffic grew by 12% during FY18, the Center for Asia Pacific Aviation (CAPA) said.
According to a CAPA projection, domestic passenger volume is expected to reach 125 million in March, up 18 to 20 percent, and could maintain that pace to reach 150 million by March 2019.
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