Bangalore airport project stake

Mumbai: The Airport Authority of India (AAI) and the Karnataka Industrial Development Corporation (KIDC) are planning to pick up 26 per cent stake (13 per cent each) in the proposed $230-million Bangalore international airport project.

The Karnataka government on 25 September had awarded this private sector international airport project to the Larsen and Toubro-led consortium.

The Bangalore airport is India's second greenfield airport to be built with investment from private firms. The first one was in Nedubassery in Cochin.

The Karnataka government, in the last-round bidding for the project, had short-listed the German construction group Hochtief AG-led consortium and the L&T-led consortium to operate the international airport.

The Hochtief consortium included Dusseldorf Airport while the L&T-led consortium consists of the Swiss airport operator Unique Zurich Airport and German engineering and electronics major Siemens AG.

Senior L&T officials said: The Karnataka government has awarded the project to us on 25 September and the final equity structure of the same will be finalised soon. AAI and KIDC are planning to pick up around 26 per cent stake in the project while the promoters of the project will hold the remaining 74 per cent, the officials said.

The Karnataka government has granted around $80 million towards the construction of the project and the remaining $150 million has to be raised by the promoters. The debt equity ratio of the project will be 70:30.

As per the agreement between the promoters, Siemens would provide the equipment for the project, L&T would construct the project and Zurich would take care of the airport operations.
As part of the rupee debt mobilising programme for the project, L&T has already initiated talks with all the leading financial institutions and banks, while the Zurich Airport and Siemens would bring the dollar debt component for the project, the officials said.

Bangalore, India's technology hub, is home to hundreds of software firms that are hit by the lack of a modern international airport because the existing one cannot handle large aircraft, and passengers have to fly out of Chennai or Mumbai.

In 1998, a consortium led by India's Tata Group, backed out of the Bangalore airport project, citing delays in government approval. The consortium included Raytheon Co of the United States and Changi Airports Authority of Singapore.