Bangalore-based GMR Infrastructure today said it was close to raising as much as $150 million (around Rs 698 crore) in the second round of private equity investment for its airport arm, GMR Airport Holdings. Last month, it had raised $200 million (Rs 893 crore) from SBI Macquarie Infrastructure Fund.

The company is awaiting government approval for the deal. According to the current regulations, any investment of or above Rs 1,200 crore in the aviation sector needs government approval. Since SBI Macquarie’s investment was through an offshore vehicle, the new deal will breach the upper limit.

BSE  |  NSE Price

Also Read   Related Stories News Now - GMR Infra eyes $150 mn in PE for airport unit - GMR Infra: Ready to take off - Macquarie SBI Infra invests Rs 893 cr in GMR Airports - Newsmaker: G M Rao - On second thoughts, no touchdown - Three PE firms to invest in GMR Airport: report

Also Read   Related Stories News Now - Markets end flat - Turbulence ahead for airlines despite oil price drop - Weak rupee may bring cheer to NRIs, expats - LIC buys PSU stocks, sells pvt sector blue-chips in Q4 - Banks may lower deposit rates as inflation eases: Report More

According to Rao, there would be no immediate equity dilution due to the investments, as it would be in the form of a compulsorily convertible structured product, that will be convertible when the unit goes public. “We cannot predict when we can come up with an IPO,” said Rao. The private equity investment by SBI Macquarie was also through compulsory convertible preference shares.

GMR Airport Holdings operates two airports in India (New Delhi and Hyderabad) and one in Turkey (the Sabiha Gokcen International Airport, Istanbul). The recent private equity investments, however, will be used to develop new projects. The airport arm accounts for as much as 46 per cent of GMR Infra’s revenues.

GMR Infra has been battling a high debt of around Rs 15,300 crore, while its airport business itself has a debt of around Rs 9,200 crore. The fresh equity infusion can reduce the company’s debt-equity ratio. The company’s borrowings are expected to rise, as it is developing a new project in Male. Airport projects, like other infrastructure projects, require high initial capital expenditure and take at least five-seven years to break even.

However, experts say the airport business is poised to grow. “Airport traffic has increased and so has project growth rate. So, it would be a good opportunity for private equity investors,” said Umesh Agarwal, head - infrastructure of PriceWaterhouseCoopers.

New Ipad Application :Business Standard's all new IPad App Click here to download for free Other Stories      - Markets end flat - Turbulence ahead for airlines despite oil price drop - Weak rupee may bring cheer to NRIs, expats - LIC buys PSU stocks, sells pvt sector blue-chips in Q4 - Banks may lower deposit rates as inflation eases: Report

Tags : GMR Infrastructure | GMR Airport Holdings | SBI Macquarie Infrastructure Fund | A Subba Rao | Umesh Agarwal | PriceWaterhouseCoopers |   Read Business news in  Advertisements -  Journey on, We are by Your Side. Click here to know more -  2 Lac Apartments, 1 Lac House / Plots. Click here -  Benefits Upto Rs. 2.36 Lakhs on the Fully Loaded TJet Petrol. -  The Best Seller is Also the No. 1 in Mileage. Click here -  Watch The Film Here. Click here to know more.. -  Leader in Passenger Car & Automobile Tyres. Click here -  1 billion in saving for Unilever without any tangles. -  A Brand New Server at a Price That Fits Your Budget. Click here -  Learn How One City is Running on FOOD SCRAPS. -  One Partnership Endless Possibilities. Click here to know more -  Helping doctors detect diseases earlier, saving costs & extending lives. -  36 Lakhs can get you a pool of Luxuries. Click here -  Which is the best plan for your daughter -  Check out the TRUE COLOURS of your Stocks, Now for FREE! -  One of the leading business schools in the world.Know More