GMR Infra to exit Istanbul airport

The developer sells 40% stake in Turkey airport to Malaysia Airport Holdings for Rs 1,900 cr

GMR Infrastructure, the Bangalore-based listed developer, is set to sell its entire 40 per cent stake in Istanbul’s Sabiha Gökçen International Airport for Euro 225 million (Rs 1,900 crore) to Malaysia Airport Holdings Berhad (MAHB).

MAHB holds 20 per cent stake in the Turkey project, while Turkey-based Limak Construction holds another 40 per cent. MAHB, in a regulatory filing, said it  exercised its right of first refusal (ROFR) to acquire the stake in the company.  

GMR said they had received a notice from MAHB, seeking to exercise its ROFR. GMR had initiated a discussion with TAV Airports Holdings, which runs another airport in Turkey.  “As part of the discussions, Malaysia Airport Holdings exercised its rights,” a senior GMR official told Business Standard.  MAHB is also a stakeholder in two other airports at New Delhi and Hyderabad, which GMR manages.

GMR had entered this project during May 2008, involving a capital expenditure of Euro 550 million (Rs 3,800 crore), which includes a debt of Euro 400 million (Rs 3,400 crore). The company has so far invested Euro 70 million (Rs 594 crore).  

Senior GMR Group officials said the exit was part of the articulated asset-light-asset-right strategy, which the company embarked up on mid last year that involves a roadmap for  develop-build-create value-divest.   

GMR’s debt had ballooned to Rs 40,000 crore. According to senior officials of GMR Infrastructure, as much as Rs 1,500 crore from the proceeds of divesting the airport would be used to address the debt issue.

GMR has managed to strike a good valuation of 15 times the forward Ebitda (earnings before interest, taxes, depreciation, and amortisation) before calendar year 2014, given the context that “there is good growth in this project”.

During the year ended March 2013, the airport, which has a capacity to handle 25 million passengers annually, saw a traffic of 15.34 million passengers — growth of 11 per cent from 2011-12. Its revenue for 2012-13 grew 30 per cent from the previous year to Rs 325 crore. But the company’s loss in the year stood at Rs 123 crore, an increase of 18 per cent from that in 2011-12, mainly on account of a 14 per cent increase in financing costs.

GMR’s exit marks the company's waning global presence after an aggressive expansion. Earlier this year, the company exited its 70 per cent stake in a gas-fired power project in Singapore, realising around $125 million. Later, it also sold its stakes in coal mines in South Africa, raking in around $50 million. Besides Turkey's airport, GMR has presence in Indonesia, too.  It holds stakes in two coal mines with an investment of close to $600 million. The company has, over the past two years, divested its stake in Intergen Global Power Project, making close to $900 million.

Last year, it also saw an unceremonious exit from the Male International Airport, which involved a total outlay of $500 million, over alleged irregularities during the bidding process and for levying development fees. These divestments come in the wake of GMR's move to be the highest bidder to manage an airport project in Philippines along with a local partner, with a total outlay of $400 million.

GMR'S DIVESTMENTS

During 2013

• GMR set to exit its entire 40% stake in Istanbul Sabiha Gökçen International Airport for Rs 1,900 crore
• GMR exits Ulundurpet Expressways for Rs 222 crore
• Sells 70% stake in a gas-fired power project in Singapore unlocking Rs 1,600 crore
• Exits its holding in South African coal-mines realising $50 million
• Divests 74% stake in GMR Jadcherla Expressway for Rs 195 crore

During 2012

• Forced out of $500-million Male International Airport arbitration on in Singapore

During 2011

• Exits its 50% stake in Intergen Power for $900 million