Essel Infra links with US-based developer

The Subhash Chandra-led Essel Infraprojects, reiterating its interest in the upcoming Navi Mumbai and Goa airports, has tied up with ADC&HAS Airports Worldwide, the US-based company that runs airports in Ecuador, Costa Rica and Korea. It is a joint venture of Houston Airport System, Airport Development of Canada and Omers, a Canadian pension fund.

The Essel group, with the TAV group, had unsuccessfully bid to run the privatised Mumbai airport in 2005.

Jorge Roberts, ADC&HAS Airports Worldwide's director (project development) said India remained an attractive investment destination, despite the delays and regulatory problems. “We are patient. We are long-term investors,” he said.

The equity structure between them and Essel, he said, would be finalised after the issue of a formal Request for Proposal for the Navi Mumbai project. He said India was a stable democracy and his company had been operating in far more difficult markets such as Ecuador, which had seen successful and failed coup bids recently.

"Our objective is to build an airport that is financially feasible and competitive. It is not about how the airport looks or its size. We are backed by the third largest pension fund from Canada and have financial wherewithal for large-scale investment,'' he added.

Fraport, the airport operator based in Frankfurt, and Zurich Airport are eyeing the contract to build and run the Navi Mumbai project. Fraport has a 10 per cent share in Delhi International Airport Ltd but is about to exit that joint venture. Kai Zobel, global investments and management vice-president of Fraport AG, said: “We will be exiting from Delhi airport by the end of the second quarter or, at most, the third quarter of 2013. We are in talks with GMR (the majority equity holder) over valuation of the stake. We believe some improvements have to be done by the Indian government in terms of clarity over the regulatory framework.”

Adding: “When we bid for Navi Mumbai, we will be looking for an Indian partner if there is a legal requirement. As an investor, we would be looking at better guidelines and a structured plan. We will be expecting equity returns in double-digits.”

On equity stake in the Navi Mumbai airport, Zobel said: “We will have to evaluate that. It is always nice to have at least 30 per cent; then you can make some decisions.”

Zurich Airport emphasised the need for a clear regulatory framework.

Christian Sigg, its VP, international business development, said: “There are issues regarding land acquisition, land side access and traffic split (between Mumbai and Navi Mumbai ) that need to be addressed.”

Adding: “We haven't set an upper limit for investing in India. If the project is viable for us, we are willing to invest $50-100 million (Rs 260-530 crore).”