GMR Group to sell 49% stake in airport business to France's Groupe ADP

Rs 10,780 cr deal values GMR Airports at Rs 22,000 cr; pact with Tatas cancelled over airline ownership norms

GMR Group has signed an agreement with Groupe ADP of France to sell a 49 per cent stake in its airport-holding company. The group will raise Rs 10, 780 crore from the deal, which will help it pare debt. The deal values GMR Airports at Rs 22,000 crore. 

GMR had in March 2019 signed a definitive agreement with a Tata group-led consortium to sell 44 per cent in the company. In January this year, it decided to divest a 49 per cent stake. But despite getting clearance from the Competition Commission of India (CCI), the deal faced hurdles because it violated a clause that prevents airline groups from holding more than a 10 per cent stake in Delhi International Airport Limited (DIAL). 

The Tatas hold a majority stake in Vistara and AirAsia India. GMR holds 64 per cent stake in DIAL.

The new deal will give a fresh lease of life to GMR Group’s debt-restructuring plan, which was held up due to the regulatory hurdle for the Tata deal. GMR Infra has a debt of Rs 25,660 crore in its books.

“The partnership with Groupe ADP is in line with GMR’s business direction to become a global airport developer and operator,” G M Rao, chairman of GMR Group said. “We have been on a journey of defining airports of the future with key focus on passenger experience by leveraging enhanced technology and offering superior amenities. With Groupe ADP, GMR will have smoother access to global markets, opening up newer avenues for business growth.”

According to the company, the first tranche of Rs 5,248 crore will be immediately received by the company.  

“This money will  help  deleverage the group further and result in improved cash flows  and  profitability,” the company said.

The structuring of the deal will unfold in two phases: The first phase will be realised in the coming days for a 24.99 per cent stake. The second phase, for 24.01 per cent, is subject to certain regulatory conditions, for obtaining approvals from the Reserve Bank of India. It will be concluded during the upcoming months, Groupe ADP said.

Analysts said the current deal seemed to be better than the earlier one as it would wipe out additional corporate debt of Rs 18 billion and would alleviate all the concerns surrounding the corporate debt.

“We view this as positive as GMR has been able to enter into a deal at a higher valuation and raising higher cash, which will be utilised to eliminate entire corporate debt. Along with sale of GMR Kamalanga, this will wipe out the entire corporate debt. Key risk is the approval of the deal by regulatory authorities. This is a less problematic than the earlier transaction," said Mohit Kumar of IDFC Securities.

Groupe ADP said the acquisition fit within Groupe ADP’s strategy. “This will constitute a  growth  driver in  the  medium  term,  and  also  a  transforming  position  for  the group in one  of  Asia's  and  the  world's fastest growing country," said Augustin  de  Romanet,  chairman  and  CEO at Groupe ADP.