Karnataka minister seeks to block B'luru airport stake sale to Fairfax

Prem Watsa firm is a financial investor and lacks expertise to run airports

D K Shivakumar, Karnataka's energy minister Karnataka Minister has petitioned that the control of the Bangalore International Airport Ltd or BIAL, the operator of city's airport should not be given to Fairfax Group, owned by Canadian billionaire Prem Watsa saying it lacks expertise in running an airport

Shivakumar, belonging to the dominant Vokkaliga community, has asked chief minister Siddaramaiah to block sale of the remaining 10% present of GVK Group, which has a stake in the airport, to Fairfax.

The Prem Watsa-owned Fairfax has majority 38% stake in BIAL, after it bought 33% stake in the airport from GVK group for $ 321 million and an additional 5% from Unique Zurich. Fairfax was to take the remaining 10% of stake held by GVK. 

"The M/s Fairfax Group is only a financial investor and has never operated or maintained any international airport. And, if the GVK Group exits by selling their stake to a foreign company as proposed, then the BIAL will be left with no one among the shareholders who have such an experience and expertise," wrote Shivakumar in a letter to chief minister on Saturday. 

The Karnataka government owns 13% stake in the airport and has its chief secretary as the chairman of the board of BIAL. The Airports Authority of India has another 13% in the company. A private consortium owns 74% in the company.

Fairfax is the third owner of BIAL, which began as a company in 2005. The airport became operational in 2008, emerging as the fastest growing airport in the country.  In 2009, the initial investors L&T and Unique Zurich sold stake in the company to GVK valuing the operator for over $1 billion. GVK is forced to shed its stake in BIAL to clear debts that it had accumulated for its projects in India and abroad. Siemens, an earlier investor continues to hold 26% stake in the company.

Shivakumar said that the government should get the "required control on the management and affairs of the airport in the interest of providing services of international standards to passengers." 

He cited the shareholders' agreement that mandated at least one of the private shareholders to have experience in running an international airport.