India-based GVK Power & Infrastructure has signed an agreement to divest a 49% stake in airport business to Abu Dhabi Investment Authority (ADIA) and the National Investment & Infrastructure Fund (NIIF).
Proceeds from the transaction will be used to retire the company’s debt obligations of Rs57.5bn ($825m).
As per the term sheet signed by GVK Power & Infrastructure subsidies GVK Airport Developers and GVK Airport Holdings, ADIA and NIIF will invest in GVK Airport Holdings through the acquisition of new shares.
The proceeds from this deal will also help GVK to ward off attempts by Adani Group to acquire a stake in Mumbai International Airport (MIAL). GVK currently holds a 50.5% stake in the airport.
In January, Adani Group expressed interest in acquiring a 23.5% stake in Mumbai International Airport held by South Africa’s ACSA and Bidvest.
GVK also began the process of acquiring the 23.5% stake in the MIAL. Following the completion of this acquisition, GVK’s shareholding in MIAL will increase to 74%, while the Airport Authority of India will hold the remaining stake.
The firm also received a contract to develop a new airport in Navi Mumbai.
NIIF and ADIA are planning to inject funds through equity and debt funding, which will take MIAL’s valuation from Rs125bn to Rs130bn ($1.7bn to $1.8bn). Adani’s offer would have taken MIAL’s valuation to Rs95bn.
GVK chairman GV Krishna Reddy was quoted by The Economic Times as saying: “The funds brought in through this proposed transaction will help us deleverage as we continue with our endeavours to create the infrastructure for a strong aviation hub in India that will provide the impetus for growth and development for the entire country.
“Our future focus will be on delivering Navi Mumbai International Airport, successfully monetising Mumbai airport’s real estate and building a strong airports business at GVK.”