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Bombay HC refuses to block Bidvest from selling off 13.5% stake in MIAL

GVK, which owns 50.5 per cent in the airport, had exercised its right of first refusal to acquire Bidvest shares earlier in the year, but failed to conclude the deal

Mumbai airport
The South African company has a 13.5% stake in Mumbai International Airport (MIAL)

In a setback for Adani Group, the Bombay High Court has refused to restrain South African company Bidvest from selling its 13.5 per cent stake in Mumbai International Airport (MIAL) to a third party, including GVK Group.

Adani Group, had in September, moved court seeking execution of a share purchase agreement it signed with Bidvest and restrain it from selling stake in the airport to a third party.  On Wednesday, Justice A K Menon declined interim relief to Adani Group. The order gives a fillip to GVK Group, which recently announced fundraising of Rs 7,600 crore to block Adani Group from entering Mumbai airport.

GVK, which owns 50.5 per cent in the airport, had exercised its right of first refusal to acquire Bidvest shares earlier in the year, but failed to conclude the deal. The matter is now under arbitration and will be heard on November 24.

Separately, Bidvest entered into a share purchase pact with the Adanis to sell them 13.5 per cent stake for Rs 1,248 crore. Adani Group, which won rights to develop five Airports Authority of India airports earlier this year, has been eyeing 23.5 per cent stake in Mumbai airport held by Bidvest and Airports Company South Africa.

On Tuesday, Adani Group had informed court it would deposit Rs 1,248 crore required for stake purchase and sought a three-month extension to the long stop date (deadline) to conclude its deal with Bidvest. The deadline lapses on Thursday. However, the South African company opposed the plea.

Justice Menon also declined relief to Adani Group, which sought to restrain GVK from selling stake in its airport holding company.  In its plea, Adani Group had argued that stake sale in airports holding company level amounted to an indirect transfer of ownership in Mumbai airport and thus, Bidvest should be given the opportunity to acquire the stake.

On October 27, GVK announced it would 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 Adani Group’s proposed acquisition in Mumbai airport. 

 The group announced signing off a definitive agreement with Abu Dhabi Investment Authority, PSP Investments of Canada, and the National Investment and Infrastructure Fund for selling stake in its airport business holding company.

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 MIAL from two South African entities — Bidvest and Airports Company South Africa. 

An arbitration tribunal had given GVK Group time till October 31 to deposit Rs 1,248 crore for acquisition of Bidvest’s 13.5 per cent stake. The amount has been deposited in an escrow account, the court was informed on Tuesday.