Fairfax buys 33% stake in Bengaluru airport from GVK

Latter plans to retire Rs 2,000-cr debt, will continue to manage the airport

The Prem Watsa-backed Fairfax has bought a 33 per cent stake in Bangalore International Airport Ltd for Rs 2,149 crore from GVK Power and Infrastructure, which is selling assets to pare debt.

Canadian billionaire Watsa controls travel operator Thomas Cook and will become the largest shareholder in BIAL, the country’s first newly built public-private partnership international airport.

GVK will continue to manage the airport, which has had 100 million passenger fly through it since its opening in 2008.

GVK expects to reduce its debt by Rs 2,000 crore and save on Rs 300 crore of interest payments in a year with the transaction.

GVK Airport Developers, a wholly owned subsidiary of GVK Power and Infrastructure that also runs the international airport in Mumbai, has Rs 3,500 crore debt and had started the process of paring it last year.

GVK will retain a 10 per cent holding after the stake sale to Fairfax India Holdings Corporation and Fairfax Financial Holdings through their wholly owned subsidiaries in Mauritius.

Siemens Projects Ventures holds a 26 per cent stake in BIAL, Flughafen Zurich AG 5 per cent, and the Karnataka State Industrial Investment and Development Corporation and Airports Authority of India 13 per cent each.

The transaction is subject to customary closing conditions and lender consent and is expected to be completed by the middle of 2016.

The GVK stock rose by 6.4 per cent to close at Rs 7.12 on the BSE on Monday.

“This is an important milestone in deleveraging our  balance sheet, and all proceeds from this stake sale shall be used to bring down our debt,” GVK Reddy, chairman and managing director, GVK, said.

“We chose Fairfax because we have a long relationship with Prem Watsa and we look forward to partnering them in developing a new terminal and a new runway,” he added.

“We will support GV Sanjay Reddy as managing director of BIAL and GVK Reddy will continue as co-chairman of BIAL,” said Watsa, chairman of Fairfax India.

Goldman Sachs and DSP Merrill Lynch were financial advisors to GVK and Cyril Amarchand Mangaldas the legal advisor.
FAIRFAX'S INTEREST

• Fairfax to buy 33% stake in BIAL for Rs 2,149 cr
   
• Fairfax becomes largest shareholder in the Bengaluru airport operator
   
• BIAL is India's first newly built public-private partnership airport
   
• GVK Airports to reduce debt by Rs 2,000 cr, save annual interest costs of Rs 300 cr
   
• Fairfax owns majority in Thomas Cook, largest tour operator in India