MUMBAI: GMR Infrastructure is in advanced talks with sovereign wealth fund Abu Dhabi Investment Authority (ADIA) to sell a stake of up to 49% stake in Hyderabad International Airport, multiple sources told ET. The Bengaluru-based infrastructure developer is looking to sell non-core assets to lighten its debt burden. If the transaction goes ahead, the airport entity will be valued at Rs 5,000 crore.
Paris Aeroport, formerly Aeroports de Paris , is also in talks with GMR, sources said, although talks with ADIA are said to be much further along. Paris Aeroport owns and manages 14 civilian airports and airfields in the Paris area, including Charles de Gaulle, France’s largest such facility. “The negotiations (with ADIA) are at very advanced stages. We believe the deal could get materialised within a few weeks,” said one of the persons mentioned above.
GMR has been undertaking parallel processes aimed at selling a significant minority stake in the airport holding entity GMR Airports or selling equity in individual airports. The bidding process has seen interest from large private equity funds including KKR, Apollo Global Management and Canadian pension giant PSP Investments.
ADIA and GMR declined to comment. “We do not comment on speculative information,” a GMR spokesperson said in an emailed response.
The talks began after the infrastructure conglomerate revived plans to monetise the airport portfolio, deleverage its balance sheet and provide an exit to existing investors.
One of the most indebted infrastructure companies in the country, it owed Rs 19,856 crore at the end of FY17, although this amount is down by nearly half from the year before.
GMR holds a 64% stake in Delhi International Airport Ltd (DIAL) and 63% in GMR Hyderabad International Airport Ltd (GHIAL). It also owns 40% of the Mactan-Cebu International Airport project in the Philippines.
ADIA is one of the most aggressive sovereign funds in India and has invested in a few airports globally, including those at Gatwick and Rome. Headquartered in Abu Dhabi, the oil-rich capital of the United Arab Emirates, ADIA’s total assets under management are estimated at $792 billion, according to the USbased Sovereign Wealth Fund Institute.
ADIA has significant India exposure through direct and indirect investments in various asset classes including private equity funds, real estate and direct transactions on income-generating assets.
Analysts said GMR’s airports have done reasonably well over the years. “Under the airport segment, GMR continued to report healthy operating performance on account of increase in income from Delhi International Airport Limited (DIAL) owing to increase in traffic and land lease and recovery of user development fee (UDF) in GHIAL,” CARE Ratings said in a recent note.
“However, GMR Infrastructure continues to have below average financial risk profile on consolidated basis and it continued to report losses at net level over the past three years. Going forward, the company’s ability to deleverage the balance sheet supported through timely materialisation of divestment/asset monetisation plans thereby improving its cash flows shall also be the key rating sensitivity.”
Three existing investors of GMR Airports — Standard Chartered Private Equity, SBI-Macquarie Infrastructure Fund and JM Financial Old Lane — have been asking for an exit for some time now, threatening the company with legal action.
The trio had invested a total Rs 1,458 crore in March 2011by subscribing to compulsorily convertible preference shares (CCPS). They are now pushing the company to pay the Rs 3,000 crore owed to them and give them an exit. GMR Infrastructure’s stock has surged 43.08% in the last six months compared with a 17.34% gain in the benchmark Sensex.