GVK Power & Infrastructure Ltd is raising Rs 7,614 crore ($1.07 billion) from three investors to increase its stake in the operator of the Mumbai airport, thwarting Adani Group’s attempt to seal the deal.
The Hyderabad-based group said in a statement on Sunday that units GVK Airport Developers Ltd and GVK Airport Holdings Ltd have signed definitive agreements with Abu Dhabi Investment Authority (ADIA), Canada's Public Sector Pension (PSP) Investment Board and Indian government-backed National Investment & Infrastructure Fund (NIIF).
The two units will use the money to repay debt and buy the stake held by South Africa’s Bidvest and Airports Company of South Africa (ACSA) in Mumbai International Airport Ltd (MIAL), the statement said.
GVK Airport Holdings owns a 50.5% stake in MIAL while Bidvest and ACSA hold a total of 23.5% and the Airports Authority of India 26%. GVK had offered to buy the two South African companies’ stake in February and March by exercising its right of first refusal after billionaire Gautam Adani-led Adani Group offered to buy this stake.
However, a delay in making payments from GVK prompted Bidvest to approach court for permission to sell its stake to another bidder. In April, GVK signed an initial pact with ADIA and NIIF to sell a 49% stake in GVK Airport Holdings.
GVK Airport Holdings, through MIAL, operates the Mumbai airport. It is also developing an airport at Navi Mumbai through MIAL’s 74% subsidiary, Navi Mumbai International Airport Pvt. Ltd.
The signing of definitive agreements means GVK has not only roped in a third investor—PSP Investments—but also that it will now be able to make the necessary payments to increase its stake in MIAL to 74%. PSP’s investment is supported by its global airports platform, AviAlliance, GVK said in its statement.
After the investment transaction concludes, GVK Airport Developers will hold a 20.9% stake in GVK Airport Holdings while ADIA, PSP and NIIF will share the remaining 79.1% equally.
GVK Reddy will continue as executive chairman and GV Sanjay Reddy as managing director in both MIAL and Navi Mumbai International Airport, the statement said. Also, both airports will continue to be branded as GVK airports.
“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,” said GVK Reddy, who is also chairman of GVK Group.