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GVK Airports has signed definitive agreements on Sunday with three investors – ADIA, Abu Dhabi; PSP Investments, Canada and the NIIF, India for an aggregate investment of ₹7,614 crore.
Proceeds from this transaction will be used by GVK to primarily retire debt obligations of its holding companies significantly and fund the purchase of additional shares in MIAL, from our partners - Bidvest and ACSA.
GVK will continue to manage both airports and also they will be branded as GVK Airports.
The diversified Hyderabad based infrastructure company has been working towards paring its debt, and the deal paves the way for a smoother transition as it takes up development of the Navi Mumbai airport.
The Adani Group was also eyeing the stake of Bidvest and ACSA. However, GVK has managed to exercise its right to buy out the stake. It has the first right of refusal.
The GVK group had earlier sold its stake in the Bangalore International Airport Limited to the Prem Watsa led Fairfax Holdings also to bring down its mounting debt obligations.
During a recent interaction, GVK Reddy, Chairman of GVK Group, had told BusinessLine that they were confident of closing the stake sale deal of the airports business before October end.
The stake sale in the airport’s arm will also enable GVK to hike its stake in MIAL.
GVK Reddy said, "We are delighted to welcome ADIA, PSP Investments and NIIF as shareholders in GVKAHL. Together, we will continue with our endeavours to create world-class infrastructure and a strong aviation hub that will provide the impetus for growth and development of Mumbai and India. We will now accelerate our efforts for developing the Navi Mumbai International Airport, monetizing MIAL’s real estate assets and building an even stronger airports business. This transaction validates the Government of India’s efforts to attract global investors."
With this Transaction, MIAL and NMIAL will also benefit from the backing of global infrastructure investors as both airports embark on the next growth phase that would lead to unlocking significant value through real estate development in MIAL and the development of the NMIA.
Terms of the transaction
As per the terms of the proposed transaction, upon completion, GVKAHL will have four shareholders – GVKADL, ADIA, PSP Investments and NIIF. GVK Reddy will continue as Executive Chairman and G V Sanjay Reddy as Managing Director in both MIAL and NMIAL. Krishna R. Bhupal will continue as the Director of MIAL and also Executive Director of NMIAL. Both airports will continue to be branded as GVK Airports. Upon completion of the transaction, GVKADL will hold 20.9% in GVKAHL, and the balance will be equally shared between the investors.
The transaction closure is subject to the satisfactory completion of closing conditions, including regulatory/third party approvals and lender consents. Citigroup Global Markets India Private Limited are the exclusive financial advisors, and Cyril Amarchand Mangaldas is the legal advisors to GVK for the transaction.
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