GVK Power & Infrastructure Ltd on Monday said it will sell 33 per cent stake in Bangalore International Airport Ltd to Fairfax Group for ₹2,149 crore.
The board of the Hyderabad-based diversified infrastructure company approved the stake sale to FIH Mauritius Investments Ltd and Fiarfax India Holdings Corporation. Once complete, the deal will bring down GVK’s debt by about ₹2,000 crore and save interest costs of about ₹300 crore a year.
The transaction is expected to be complete by mid-2016.
“This is an important milestone in de-leveraging our balance sheet, and all proceeds from this stake sale shall be used to bring down our debt obligations to our lenders,” said GVK Reddy, Founder Chairman and Managing Director of GVK. “We chose Fairfax as a partner in BIAL as we have a long-standing relationship with its Chairman Prem Watsa.”
Reddy said he was looking forward to partnering with Fairfax for developing Terminal 2 and the runway at the Kempegowda International Airport.
“We will work closely with all stakeholders to manage our stake in BIAL going forward and will support GV Sanjay Reddy to continue to lead the management team as Managing Director of BIAL and GVK Reddy to continue as Co-Chairman of BIAL,” said Watsa.
BIAL owns and operates the Kempegowda International Airport Bengaluru under a 30+30 year concession agreement from the Centre. The KIAB has the distinction of being the first Greenfield airport in India that was built under the PPP mode. The airport began operations in May 2008.
GVK Airport Developers, a wholly owned subsidiary of GVK Power, initiated a financing process last year to reduce debt obligations to its lenders. GVK has been seeking to divest a stake in the Mumbai airport project as well. Singapore’s Changi was among those rumoured to be in the running. However, no decision has been taken yet.
On a consolidated basis, the company’s debt is estimated to be about ₹25,000 crore.