The Gautam Adani-controlled conglomerate said on Monday it had signed a definitive deal to buy GVK Airport Developers Ltd’s debt, against which it pledged a 50.5% stake in Mumbai International Airport Ltd (MIAL).
The Adani group will also purchase the combined 23.5% stake held by Airport Company of South Africa (Acsa) and South Africa’s Bidvest group in MIAL, for which it has obtained approval from the Indian Competition Commission, according to a statement from the Adani group. This would give the group a 74% stake in MIAL. The remaining 26% stake would be held by the Airports Authority of India.
The deal will also give Adani Airport Holdings Ltd (AAHL) a controlling stake in Navi Mumbai International Airport being developed by the GVK group. Furthermore, with one of the two most profitable international airports in India in its kit and having won the development and operating rights during a 50-year lease for Ahmedabad, Lucknow, Mangaluru, Jaipur, Thiruvananthapuram and Guwahati airports, Adani Enterprises Ltd will be the largest private sector airport operator in India in terms of number of airports.
Once the transaction with GVK is completed, it will end the ongoing dispute between the two parties for control of the airport asset.
mint reported on Aug. 25 that GVK reached out to lenders to urgently raise cash to prevent a possible MIAL takeover.
“The discussions were ultimately unsuccessful due to the current market condition and poor prospects for the aviation sector,” said a person familiar with the matter, who was seeking anonymity.
The GVK group has been struggling with high debt.
In 2018-19, the latest available annual finance from GVK Power and Infrastructure, the company posted revenue of ₹4,098 crore with the airports subsidiary contributing ₹3,700 crore, or more than 90%. Mumbai Airport contributed ₹119.4 crore to net profit even as the group reported an overall loss of ₹363.49 crore. As of March 2019, GVK Power and Infra had a net debt of ₹13,600 crore.
Mumbai Airport handled a combined traffic of 45.92 million passengers in 2019-20, of which 12.36 million were international and the remainder domestic.
The purchase of the stake is the culmination of the Adani group’s ongoing efforts. Last year, Adani started talks with the Bidvest group in South Africa.
However, a transaction was blocked by GVK, who, according to people familiar with the matter, viewed the move as a hostile takeover attempt. Subsequently, GVK agreed with several investors: the Abu Dhabi Investment Authority, the Public Sector Pension Investment Board of Canada and the state-backed National Infrastructure and Investment Fund to sell a 79.1% stake in GVK. Airport Holdings by ₹7,600 crore. The deal, had it been carried out, would have allowed the GVK group to repay the lenders and retain control of MIAL.
However, on Monday, GVK said that the aforementioned deals with investors ended. He did not reveal reasons.
In announcing the deal, GVK Reddy, GVK Founder and Chairman, said: “The aviation industry has been severely affected by covid-19, delaying it for many years and affecting MIAL’s finances. Therefore, it was important that we bring in a financially sound investor in the shortest time possible to improve MIAL’s financial position as well as to help achieve the financial closure of the Navi Mumbai International Airport project. ”
“It is in these circumstances that we agreed to cooperate with Adani to achieve these two goals. Additionally, when the transaction is consummated, which is subject to customary approvals, we would be reducing a significant portion of our obligations to our lenders, which is of utmost importance to the group, “added Reddy.
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