GVK to sell 79% stake in airport business to 3 investors, raise Rs 7,614 cr

The GVK group will raise Rs 7,614 crore by selling 79.1 per cent stake in its airport business to three investors to pare debt and stave off the Adani group’s proposed acquisition in Mumbai airport. The group on Sunday announced signing off a definitive agreement with the Abu Dhabi Investment Authority (ADIA), PSP Investments of Canada, and the National Investment and Infrastructure Fund (NIIF) for selling stake in its airport business holding company.

The proceeds from the transaction will be used by GVK to retire around Rs 5,500-crore debt of its holding companies and fund the purchase of additional shares in Mumbai International Airport (MIAL) from two South African entities — Bidvest and Airports Company South Africa. 

An arbitration tribunal has given the GVK group time till October 31 to deposit Rs 1,248 crore for acquiring Bidvest’s 13.5 per per cent stake. A GVK spokesperson said funds required for purchasing shares in MIAL will be transferred to an escrow account before October 31.

After the stake sale, the GVK group will continue to have management control of its airport business. GVK Reddy will continue as executive chairman and G V Sanjay Reddy as managing director in both MIAL and Navi Mumbai International Airport, he said. 

Upon completion of the transaction, GVK Airport Developers will hold 20.9 per cent in GVK Airport Holdings. The rest will be equally shared between the investors, said the company. It added that the closure of the transaction was subject to regulatory approvals and consent of lender.

Initially, the group had proposed 49 per cent sale in its airport business to ADIA and NIIF to reduce or refinance debt. A term sheet was signed with two investors in April.

The GVK group owns 50.5 per cent in MIAL and is also developing the Navi Mumbai International Airport.

The group is locked in a legal battle to prevent the Adani group’s entry in Mumbai airport.

Earlier this year, the GVK group had exercised its right of first refusal to acquire Bidvest’s 13.5 per cent stake in Mumbai airport for Rs 1,248 crore. But it was unable to conclude the deal and instead filed a plea in Delhi High Court to prevent stake sale to third party.

The matter is now under arbitration after GVK group lost its plea in the court. The arbitration tribunal has also restrained the transfer of Bidvest shares till the next date of hearing in November.

Separately Adani group which signed a share purchase agreement with Bidvest for 13.5 per cent stake in MIAL  moved the Bombay High Court last month staking it’s claim on the shares. The two sides had extended the long stop date or deadline for share acquisition till November 7.

The Adani group has won the rights to develop five airports — Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, and Mangaluru airports in an auction earlier this year and was eyeing large stake in Mumbai airport.