GVK Power and Infrastructure has decided to sell 33 per cent of its stake in Bangalore International Airport Ltd (BIAL) to Fairfax India, promoted by Prem Vatsa, for Rs 2,149 crore.
BIAL owns and operates the Kempegowda International Airport Bengaluru whcih started operations in May 2008. In BIAL, GVK Group holds 43 per cent stake, Siemens Project Ventures GmbH 26 per cent and Flughafen Zurich AG Ltd 5 per cent while state-owned entities Airport Authority of India and Karnataka State Industrial Investment & Development Corporation Ltd hold 13 per cent each.
“Upon completion of this transaction, there would be reduction of debt burden of around Rs 2,000 crore and would also result in savings of interest costs to the extent of Rs 300 crore per annum,” the company said. G V Sanjay Reddy will continue to lead the management team as Managing Director (MD) of BIAL and G V K Reddy would remain as Co-chairman.
“All proceeds from this stake sale shall be used to bring down our debt obligations to our lenders. We chose Fairfax as a partner in BIAL as we have a long standing relationship with its chairman, Prem Watsa and we would look forward to partnering with them in developing Kempegowda International Airport through its next stage of expansion as we develop a new world-class Terminal 2 and a new runway,” Reddy said.
Fairfax was founded in 1985 by the present Chairman and Chief Executive Officer, V Prem Watsa. Its common shares are listed on the Toronto Stock Exchange under the symbol FFH and in U.S. dollars under the symbol FFH.U. Fairfax’s insurance and reinsurance companies operate on a decentralized basis, with autonomous management teams applying a focused underwriting strategy to their markets. Fairfax Financial Holdings Limited, the controlling shareholder of Fairfax India, has a portfolio of assets in excess of $30 billion invested worldwide.
Fairfax Financial Holdings had recently increased its stake in ICICI Lombard General Insurance to 35 per cent from 25.7 per cent.
GVK shares soared 6.43 per cent to settle at Rs 7.12 on the BSE. In intra-day, the stock climbed 10.31 per cent to Rs 7.38.BIAL recorded a revenue of Rs 289.68 crore for the quarter ended December 2015 as against Rs 242.72 crore for the previous year registering an increase of 19.3 per cent. EBIDTA margin improved to 71.6 per cent as compared to 67.5 per cent in the previous year. Net adjusted profit for the quarter ended December 2015 is Rs 114.92 crore as against Rs 10.01 crore for the previous year.
GVK Power’s net loss at consolidated level for the December quarter was Rs 279.06 crore as against Rs 209.12 crore in the corresponding quarter of FY15.