GVK Power and Infrastructure Limited today announced its decision to exit Bangalore International Airport Limited (BIAL) by selling its residual 10 per cent stake to Fairfax India Holdings Corporation for Rs1,290 crore (approximately $200 million).
The transaction is expected to be completed by early July 2017. The proceeds of this sale are to be used for further reducing the debt obligations of GVK. The deal with Canadian investor Prem Watsa takes valuation of BIAL to Rs12,900 crore.
In March 2017, GVK closed a deal t9o sell 33 per cent stake in BIAL and the deal was signed in March 2016. GVK, however, had retained a 10 per cent stake and the management of BIAL.
BIAL is the owner and operator of the Kempegowda International Airport Bengaluru (KIAB), which reported a record passenger traffic of 22.16 million in calendar 2016. On an average, 60,000 passengers travel through KIAB every day.
GVK will now focus on the upcoming Navi Mumbai International Airport, for which it had won the contract.
''Notwithstanding this sale, the Airports sector will continue to be a core focus area for GVK. We had entered BIAL in 2010 when the airport was going through a tough phase as the capacity was severely constrained. Over the last seven years, we have worked very hard to transform BIAL into a world-class airport. The airport is now ready for another phase of expansion with a new runway and a new terminal to be constructed. However, we have decided to part ways with BIAL as deleveraging is top priority,'' G V K Reddy, founder chairman and managing director of GVK, said.
''Our immediate focus will now be on Mumbai and Navi Mumbai airports and on selectively evaluating privatisation opportunities. The reduced debt burden gives us flexibility and releases management bandwidth to focus on these projects. Capacity optimisation and real estate development will be the key focus areas for the existing Mumbai airport. Having won the bid for the Navi Mumbai airport, we are excited to deliver yet another world-class airport. The government's focus on developing the aviation sector also presents attractive growth opportunities and we are evaluating these,'' said Reddy.
''I would like to thank the government of Karnataka, the Government of India, AAI and all the stakeholders for working closely with GVK over the last seven years in creating a world class airport that will continue to keep pace with the growing demand of Bengaluru in the coming years. We also wish the incoming shareholder, Fairfax India, the very best in maintaining the momentum to take the airport to even greater heights,'' he added.
GVK Power and Infrastructure is reeling under a debt overhang of about Rs30,000 crore.