GVK seeks to become majority stakeholder in Bangalore airport

GVK Power & Infrastructure Ltd (GVKPIL), an infrastructure developer, is looking to acquire 51 per cent stake in Bangalore International Airport Ltd (BIAL) as early as possible. The transaction will be executed through its subsidiary Bangalore Airport & Infrastructure Developer Private Ltd (BAIDPL), a senior company official said.

“We are open to acquiring a majority stake in BIAL from the existing stakeholders. Right now, there is nothing available. Existing stakeholders cannot sell their holding for seven years as they have a lock-in period, which expires in 2015. I don’t see we can increase the stake till then. When they are allowed and if they decide to sell, we can buy at a right price,” said Sanjay Reddy, managing director, GVK Power.

Earlier this week, BAIDPL, closed the deal to acquire 53.84 million equity shares of Rs 10 each, totaling 14 per cent stake in BIAL, from Siemens Project Ventures for over Rs 613.8 crore. With the transaction, GVK increased its stake in BIAL to 43 per cent. It needs another eight per cent to gain a controlling stake.

With the acquisition, GVK became the single largest shareholder in BIAL. The Karnataka government and the Centre, through the Airports Authority of India, hold 13 per cent each, while Siemens holds 26 per cent and the remaining five per cent is held by Zurich Airports.

GVK also operates the Chhatrapati Shivaji International Airport, Mumbai. Together with the Bengaluru International Airport, the company is expected to handle a passenger traffic of about 43 million for the financial year 2011-2012.

When asked, if the company is looking to raise fresh equity, Reddy said, “We are waiting to raise a minority equity stake. Our business is capital intensive and we continue to raise capital. Last December, we raised equity in GVK Energy and we continue to look at opportunities in the airports and transportation business.”

However, he said the company has funded both the Bangalore and Mumbai airports acquisition from the loan raised last year. It would raise funds as and when the right opportunities come by, he said.

“We have funded whatever loan we raised last year. We are not desperate to raise the capital. We spent around Rs 650 crore for BIAL’s 14 per cent and 13.5 per cent for Mumbai airport that cost Rs 1,150 crore,” Reddy said.

At present, BIAL is spending Rs 1,200 crore to expand Terminal-1 and are firming up plans for the second terminal building.

Reddy said the company was looking at new airports in Spain and Brazil. “But the problem is that the government’s expectations in Spain are very high. They expect $6 billion from two airports with 20 per cent minimum revenue share. Same is the case with Brazil. It’s not clear what they want and once they come out with a clear policy we will look at them,” he said.