Tatas, S'pore SWF, SSG fund buy 45% of GMR Airports for `8K cr
Mumbai/New Delhi: GMR Infrastructure Wednesday said the Tatas along with Singaporean sovereign wealth fund GIC and another Singaporean fund SSG Capital Management, have picked up around 45 percent stake in its airports arm for Rs 8,000 crore.
The deal values GMR Airports at over Rs 17,700 crore and post-deal, the group flagship GMR Infra and subsidiaries will hold around 54 percent in the airport arm, the consortium of new investors will own the close to 45 percent and the remaining will be held by an employees welfare trust.
Of this, the Tatas will own around 20 percent by investing Rs 3,520 crore (which is around 45 percent stake of the total equity that the consortium will own in GMR Airports), GIC will pump in Rs 2,640 crore for 33 percent share of the diluted equity or 15 percent in GMR Airports and SSG will chip in with Rs 1,760 crore for a 22 percent of the diluted stake or around 10 percent in the company, GMR group told reporters in Mumbai Wednesday.
The GMR group operates the country's largest airport in New Delhi which has an annual capacity of 70 million and the 22-million Hyderabad airport, besides Mactan-Cebu in the Philippines (with 40 percent stake) and Crete in Greece in which it controls a little under 22 percent.
Significantly, the Tata group, which also runs the full service airline Vistara in partnership with Singapore Airlines and the low-cost AirAsia India, enters the booming airport business at a time when the Adani group has bagged the mandate to run as many as six government-run airports for a 60 year-period through an last month.
As part of this transaction, GMR Infra intends to provide an exit to existing private equity investors who hold 5.8 percent equity stake in the airport arm and most of the proceeds from sale will be used to pare the group debt of Rs 20,000 crore, Saurabh Chawla, executive director finance and strategy at GMR Infra, said.
Of the consolidated debt of Rs 20,000-crore, GMR Infra alone has about Rs 6,500 crore in its books, and GMR Airports has around Rs 2,000 crore as of the December 2018 quarter, GMR group chief financial officer Sushil Modi said.
Paring of debt will help reduce consolidated finance cost by almost half from Rs 2,000 crore at the end of the last quarter, Modi said.
"So, post-transaction, which should be completed in the next two months, consolidated debt would come down to Rs 12,000 crore-Rs 7,000 crore at the group level and Rs 1,000 in GMR Airport," Modi said, adding helping the group flagship GMR Infra become PAT positive from the next financial year.
The new capital of Rs 8,000 crore will consist of Rs 1,000 crore equity infusion into GMR Airports and Rs 7,000 crore towards picking up GMR Airports' shares from GMR Infra and its subsidiaries by the consortium, Chawla said.
The deal is subject to customary regulatory approvals, lenders' consents and other approvals.
The transaction will speed up GMR Infra's plan to demerge its energy, highways, urban infra and transportation businesses, leading to separation of its airport business and the group will broadly have two main companies-those listed entities under one arm and those unlisted under another arm.
"The Tata Group has identified GMR group and GMR Airports as a vehicle for their ambitions in the airports space. They also recognise the huge growth opportunities in the area," Chawla said, adding aviation is a long-term business that demands investors have patient capital and deep pockets.
While after this transaction the group's holding in airports arm will come down to around 54 percent, Modi said over a period of time promoters' will increase their stake to 62 percent by buying back a portion of the stake of the consortium to the tune of 8 percent.