Adani Group chalks up plan to invest Rs 18,000 crore in airport business

Sets aside Rs 10,000 cr to buy Mumbai airport stake

Adani Group is readying to invest Rs 18,000 crore in its airport business, including Rs 10,000 crore in acquiring a large stake in Mumbai International Airport (MIAL).

The remainder Rs 8,000 crore is to be spent on developing Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, and Mangaluru airports.

The Ahmedabad-based group won five airports in an auction in February. Investment in Thiruvananthapuram airport has been delayed owing to litigation initiated by the Kerala government, which moved the high court (HC), saying it will not let a private firm take over the airport. The matter is pending.

While Adani Group has signed an agreement to acquire 13.5 per cent in MIAL, it wants to increase its stake and has set aside Rs 10,000 crore for the purpose.

Adani Group’s planned large investment in MIAL is, however, dependent on the litigation and MIAL’s majority shareholder GVK’s stance on the stake sale.

In February this year, the Adani Group agreed to acquire South African firm Bidvest’s 13.5 per cent stake in MIAL after it decided to exit India. “We are ready to offer an investment of Rs 10,000 crore in the Mumbai airport and are awaiting the outcome of the litigation,” said a source close to the development. 

 

Bidvest had agreed to sell its stake in MIAL to the Adani Group for Rs 1,248 crore, or Rs 77 a share, giving a total valuation of Rs 8,800 crore to the Mumbai airport company. However, this transaction has not yet closed, owing to the legal dispute over the right of first refusal (RoFR) vested with the GVK Group, which owns a majority stake in Mumbai airport. 

The GVK Group is resisting Adani’s acquisition of Bidvest’s share by enforcing the RoFR agreement. According to the agreement, Bidvest first offered to sell its stake to the GVK Group, but GVK failed to buy the stake within the deadline which expired in March-end. 

Subsequently, the GVK Group moved the Delhi HC to restrain Bidvest from selling the stake to a third party and asked for more time to buy Bidvest’s shares.

The court ruled against the GVK Group and the matter is now under arbitration. The GVK Group has been given till October 31 to deposit Rs 1,248 crore to acquire Bidvest’s stake. There is also an injunction on the transfer of Bidvest shares till the next hearing in November.

Separately, the Adani Group has filed a commercial suit in the Bombay HC to stake its claim over Bidvest’s shares in MIAL. The Adani Group and Bidvest have extended the deadline to execute the deal to November 7.

The Adani Group is also trying to block the GVK Group’s move to raise funds after the GVK Group decided to sell its shares in the airport-holding company level.

In a fresh plea filed early this month, the Adani Group argued that the stake sale in GVK’s 

airport-holding company level (which, in turn, holds a stake in MIAL) amounts to an indirect transfer of ownership in MIAL and Bidvest should be given an opportunity to acquire the stake, which is why the Adani Group has sought the court’s direction in the matter.

A source close to the GVK Group said the Adani Group has no locus standi in the matter.

The Bombay HC will hear the Adani Group suit and its revised plea on November 5.

Apart from GVK, which owns a 50.5 per cent stake in the company, Bidvest owns 13.5 per cent and Airports Company South Africa owns a 10 per cent stake. The Airports Authority of India owns the rest. 
 

Adani has decided to give priority to airports, defence, and datacentre business.