GVK Power completes term sheet with strategic investor for its airport arm

V Rishi Kumar Hyderabad | Updated on August 16, 2019 Published on August 16, 2019

Awaits clearances from lenders to conclude the pact

GVK Power & Infrastructure Ltd has signed a term sheet with a strategic investor for GVK Airport Holdings Ltd, its subsidiary, but is awaiting various mandatory clearances and lenders’ approvals to conclude the deal.

The diversified infrastructure company is in discussions has not yet reached a definitive stage about the terms and conditions that would entail the firm purchase contract.

The step-down airport subsidiary and holding company of Mumbai International Airport Ltd holds 50.5 per cent equity and the management has been looking for divestment options in the vertical.

Before the conclusion of this deal, GVK may further hike its stake in the SPV, buying out the interest of other partners.

CCI approval

It recently secured approval from the Competition Commission of India (CCI) to hike its stake, possibly to 74 per cent.

During the divestment process, the management obtained bids for diluting the shareholding in the airport vertical, started discussions with one of the bidders and inked a term sheet.

The subsidiary has bagged the prestigious Navi Mumbai Airport project mandate, expected to see total investment outlay in excess of ₹16,000 crore.

According to the latest disclosures, the shares of the airport vertical have been pledged with various lenders and the management is yet to receive approval from them.

The strategic sale requires approvals from the Ministry of Civil Aviation, the Airports Authority of India, the CCI and others.

Navi Mumbai project

In July 2018, the company had announced financial closure for Navi Mumbai International Airport and an agreement was signed between the company and City and Industrial Development Corporation of Maharashtra Ltd (Cidco).

Navi Mumbai International Airport is a special purpose vehicle for the execution of the greenfield airport through its step-down subsidiary.

Cidco agreement

The conclusion date of financial closure is also considered the appointed date in terms of the concession agreement signed with Cidco.

The Hyderabad-based GVK Group has earlier developed the new airport at Mumbai and held a majority stake in the Bangalore International Airport project. It later sold its stake in the Bengaluru project to Prem Watsa-promoted Fairfax Holdings.

While there is no confirmation from GVK, the Singapore-based GIC could be the suitor, sources said.

Published on August 16, 2019
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