GMR Infrastructure Ltd said Friday it is selling its entire stake in a company that is building a port-based special economic zone in Andhra Pradesh for Rs 2,610 crore (about $354 million) as part of efforts to cut debt.
The energy major said in a statement it will sell its 51% stake in Kakinada SEZ Ltd to Hyderabad-based Aurobindo Realty and Infrastructure Pvt. Ltd, a real estate company set up by the promoters of Aurobindo Pharma Ltd.
As part of the deal, GMR will also sell Kakinada SEZ’s 100% stake in Kakinada Gateway Port Ltd to Aurobindo Realty.
GMR said that, of the total Rs 2,610 crore, it will receive Rs 1,600 crore when the deal closes and the remaining amount in the next two to three years depending upon certain agreed milestones.
While Kakinada SEZ is developing a port-based, multi-product special economic zone project, Kakinada Gateway has won the mandate to set up a greenfield commercial port around the same area.
GMR has been selling assets or businesses for the past couple of years to reduce its debt. The company had consolidated gross debt of Rs 32,100 crore and net debt of Rs 26,300 crore as of March 2020, regulatory filings show.
The stake sale comes just a month after GMR said it would carve out its non-airport business into another company and become a pure-play airports operator as part of a group restructuring exercise. GMR will first merge a wholly owned power unit with itself and then transfer its energy, urban infrastructure, engineering and construction businesses to GMR Power and Urban Infra Ltd. The non-airport unit will be separately listed on stock exchanges.
The announcement of the demerger plan had come after GMR in February agreed to divest a 49% stake in unit GMR Airports Ltd to French company Groupe ADP for Rs 10,780 crore ($1.5 billion then) in two stages. In July, however, GMR modified the second stage of the deal in the wake of plummeting traffic owing to the coronavirus pandemic.
GMR operates airports in New Delhi, Hyderabad and the Philippines. It is also developing an airport in Goa and in Greece. The group recently signed an agreement to develop a new airport at Bhogapuram in Andhra Pradesh and another one to commission, operationalize and maintain the civilian enclave at the Bidar airport in North Karnataka.
GMR has also been looking to sell a power plant and its coal mines in Indonesia. In fact, it had signed a pact in February to sell GMR Kamalanga Energy Ltd, which operates a power plant in Odisha, to JSW Energy Ltd for Rs 5,321 crore. However, the deal fell through.
Meanwhile, the promoters of Aurobindo Pharma entered the real estate business in June 2019. At the time, Aurobindo Realty said it would invest Rs 3,000 crore to develop 14 million square feet of commercial, residential, hospitality and retail real estate projects in Hyderabad.
According to the company’s website, its commercial projects include two office complexes-’Galaxy’ and ‘Orbit’ and a residential apartment complex ‘Kohinoor.’