BENGALURU: GVK Power & Infrastructure Ltd said it will sell 33% stake in Bangalore International Airport Ltd (BIAL) to Canadian investor Prem Watsa-led Fairfax India Holdings Corp and Fairfax Financial Holdings Ltd for about Rs 2,149 crore ($321 million) to reduce debt.
Upon completion of the transaction, expected to be over by the middle of the year, there would be a reduction of debt of about Rs 2,000 crore and also saving of interest cost of about Rs 300 crore annually, GVK Power said in a filing with the BSE on Monday.
Shares of GVK, rose about 7% to Rs 7.15 in afternoon trading on the Bombay Stock Exchange. GVK Airport Developers, a wholly-owned subsidiary of the listed GVK, had short-listed five bidders to sell up to 49% for raising Rs 4,000 crore, TOI reported in December. It also operates the Mumbai airport.
“This is an important and successful milestone of deleveraging our balance sheet and all the proceeds from the stake sell shall be used to bring down our debt obligation to our lenders. We chose Fairfax as our partner in BIAL as we have a long standing relationship with its chairman Mr Prem Watsa,” chairman and managing director GVK Reedy said.
GVK increased its holding in the BIAL to 43% from 29% in 2011, when it bought 53.8 million equity shares from Siemens Project Ventures GmbH for Rs 613.82 crore. It first bought a stake in the airport from Larsen & Toubro in 2009. It has not sold its stake in Mumbai Airport yet.
The Mumbai and Bangalore airports can handle 60 million passengers annually, making GVK one of the largest private sector operators in the country. The GVK-led consortium holds 74% stake in these two airports, while the rest is with the Airports Authority of India (in Mumbai) and between AAI and Karnataka State Industrial Investment & Development Corporation (in Bangalore).
The passenger traffic in Mumbai and Bangalore has risen 16% and 21%, respectively, in recent quarters. GVK is also working with the Indonesian government to set up two greenfield airports at Bali and Yogyakarta.
The 25-year-old Hyderabad-based infrastructure conglomerate GVK Group has been battling a Rs 24,000-crore debt burden as it emerged as one of the leading builders of highways, power plants and airports. In 2011, it made an ambitious $1.26-billion acquisition of coal mines at Queensland in Australia.
“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 Dr GVK Reddy will continue as co-chairman of BIAL,” Watsa, who is also the CEO of Fairfax, said.
Credits ET Realty