GVK Power and Infrastructure has finalised a move to divest its residual 10 per cent stake in Bangalore International Airport Ltd (BIAL) to Fairfax India Holdings for ₹1,290 crore (about $200 million).

The transaction is expected to be completed by early next month and the proceeds are to be used to reduce debt.

The company sold its stake held through its subsidiary, Bangalore Airport Infrastructure Developers Pvt Ltd. Earlier in March 2017, GVK had closed a deal signed in March 2016 with Prem Watsa-led Fairfax India to sell 33 per cent stake in BIAL for ₹2,202 crore ($336.18 million then).

It had then retained a 10 per cent stake and the management of BIAL.

GVK Reddy, Chairman and Managing Director of the GVK Group, said, “Notwithstanding this sale, the airports sector will continue to be a focus area for GVK. We had entered BIAL in 2010 when the airport was going through a tough phase as the capacity was severely constrained. Over the last seven years, we have worked very hard to transform BIAL into a world-class airport.

“The airport is now ready for another phase of expansion with a new runway and a new terminal to be constructed. However, we have decided to part ways with BIAL as de-leveraging is top priority.”

Mumbai focus “Our immediate focus will now be on development of Mumbai and Navi Mumbai airport projects and on selectively evaluating privatisation opportunities. The reduced debt burden gives us flexibility and releases management bandwidth to focus on these projects,” he said.

“Having won the bid for the Navi Mumbai airport, we are excited to deliver yet another world-class airport. The government’s focus on developing the aviation sector also presents attractive growth opportunities.”

The diversified Hyderabad-based infrastructure company has been divesting stakes in some of its businesses to bring down its mounting debt burden.

With this, it would fully exit the Bangalore International Airport project. The company has also been working on divestment of stake in some of its road and power assets, but the market conditions have made it tough. It is also saddled with a huge investment in an Australian coal mine.

After the stake sale completion, Fairfax will up its stake to 48 per cent, Siemens 26 per cent, and the Karnataka Government and Airports Authority of India 13 per cent each.

After the completion of the transaction, GV Sanjay Reddy will step down as its MD. Fairfax will then decide on the operations.

GVK shares shot up 14.45 per cent to close at ₹5.94 on the BSE.

(With inputs from Mumbai bureau.)

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