GMR Infrastructure Ltd said Thursday it will sell 49 per cent stake in its subsidiary GMR Airports Ltd to Groupe ADP — a French company that manages three airports in Paris — for a sum of Rs 10,780 crore. The deal values the operator of Delhi’s Indira Gandhi International Airport at Rs 22,000 crore. The debt-ridden firm GMR Infrastructure had earlier entered into an agreement to divest the same amount of stake in the airports arm to a consortium led by Tata Group, a deal that fell apart due to a conflict of interest issue involving Tatas’ stake in Vistara and AirAsia India. The deal also marks the entry of yet another foreign airports operator in the Indian sector in addition to firms such as Zurich Airport, Frankfurt airport operator Fraport AG and Airports Company of South Africa (ACSA). While Zurich Airport recently won the rights to build and operate the upcoming Jewar airport, the second aerodrome in the national capital region, it had also placed a bid for privatisation of Guwahati Airport. Australian infrastructure investor AMP Capital, which manages Newcastle, Leeds and London Luton airports in the UK, and Melbourne and Launceston airports in Australia, had bid for operations, management and development of Guwahati Airport. Fraport and ACSA own minority stakes in Delhi and Mumbai airports, respectively. Unlike the Tata deal, GMR said the partnership with ADP will be a strategic one that will enable exchange of expertise, personnel, knowledge and market access. This investment by Groupe ADP comprises Rs 9,780 crore towards secondary sale of shares by GMR group, and Rs 1,000 crore equity infusion in GMR Airports Ltd. “Groupe ADP has also pegged earn-outs up to Rs 4,475 crore linked to achievement of certain agreed operating performance metrics as well as on receipt of certain regulatory clarifications over next five years. Thereby, total valuation assuming all above earn-outs are successfully consummated, may reach Rs 26,475 crore on post money basis. The first tranche of Rs 5,248 crore will be received by GMR Group immediately. This money will help de-leverage the (GMR) Group further and result in improved cash flows and profitability,” GMR Infrastructure said in a statement. As of December 31, 2019, GMR Infrastructure had a consolidated net-debt of Rs 25,660 crore. For Groupe ADP, the deal gives the firm access to a portfolio of GMR’s airport assets including Delhi Airport, Hyderabad Airport, the upcoming greenfield airports in Goa and Bhogapuram in Andhra Pradesh, along with Mactan Cebu International Airport in the Philippines, and Crete airport in Greece. While GMR will retain management control over the airports business, Groupe ADP will get the rights and board representation at GMR Airports and its key subsidiaries. “Groupe ADP will be granted extended rights including the presence of board members at GMR Airports’ board equal to that of GMR Infrastructure Ltd board members. Groupe ADP will also have the right to appoint predetermined key executives within GMR Airports,” the French company said in a separate statement. In a recent research note, Crisil Ratings said “an unprecedented Rs 38,000 crore capital expenditure” is being undertaken by airport operators between 2020-2024. “The capex, the highest to be incurred in any continuous five-year period, is largely debt-funded,” it said. “Increasing footfalls at airports provide a leg-up to non-aero streams such as advertising, rentals, food and beverage and parking, which comprise around half of the revenue of airports already. These are expected to grow strongly at over 10-12 per cent, also supported by increased monetisation avenues coming along with current capex,” Crisil added. Augustin de Romanet, chairman and CEO of Aéroports de Paris SA-Groupe ADP said: “The acquisition of a 49 per cent stake in GMR Airports fits within Groupe ADP’s strategy. It sets a robust industrial partnership and enables Groupe ADP to build, only two years after taking control of TAV Airports, a unique worldwide network of airports with a solid industrial expertise and strong development capacities. This acquisition will constitute a growth driver in the medium term, and also a transforming position for the group in one of Asia’s and the world’s most dynamic and promising countries.”
