Indian company GVK Power and Infrastructure has agreed to sell 33% of its shares in Bangalore International Airport Limited (BIAL) to reduce the company’s debts.

It will divest the stake to Canadian investor Prem Watsa-led Fairfax India Holdings Corporation and Fairfax Financial Holdings for an aggregate investment of INR21.49bn ($321m).

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Expected to be completed by mid-2016, the transaction will reduce the company’s debt by nearly INR20bn ($300.5m).

It will also result in the saving of an interest cost of approximately INR3bn ($45m) every year.

"All proceeds from this stake sale shall be used to bring down our debt obligations to our lenders."

The deal’s completion is subject to customary closing conditions and third party consent.

GVK founder, chairman and managing director Dr GVK Reddy said: "This is an important and successful milestone in deleveraging our balance sheet, and all proceeds from this stake sale shall be used to bring down our debt obligations to our lenders."

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In 2015, the wholly owned subsidiary of GVK Power and Infrastructure, GVK Airport Developers, started a financing process to reduce its debts.

The parent company received several offers from which Fairfax Group was selected.

Fairfax chairman and CEO and Fairfax India chairman Prem Watsa said: "We will work closely with all stakeholders to manage our stake in BIAL going forward, and will support G V Sanjay Reddy to continue to lead the management team as MD of BIAL and Dr GVK Reddy will continue as co-chairman of BIAL."

GVK will continue to perform the role as a long-term investor and pioneer in airport assets in India.