GVK Power and Infrastructure, which operates the Mumbai International Airport (MIAL), has decided to sell the remaining 10% stake that it owns in Bangalore International Airport (BIAL) to Fairfax India Holdings Corporation for Rs 1,290 crore. According to the company, the proceeds of the current sale are to be used for further reducing debt. At the end of March 2017 the total debt of GVK group stood at Rs 25,000 crore.
With the sale of this residual stake, the GVK Group has marked its exit from BIAL. BIAL was operated by the company for the last seven years in a joint venture with the Airports Authority of India.
In March 2016, GVK had sold a 33% stake in BIAL — the deal was closed in March 2017 — at a value of Rs 2,202 crore. “Notwithstanding this sale, the airports sector will continue to be a core focus area for GVK. We will evaluate privatisation opportunities for the Mumbai and Navi Mumbai airports now that the debt burden is smaller,” said GVK Reddy, founder chairman and managing director, GVK.
Earlier this year, GVK had successfully bid for the Navi Mumbai airport. The company will need to raise funds for the pre-development, terminal and aerodrome building work of the airport. According to analysts, the GVK Group needed to reduce its debt since the company would need to raise funds for its Navi Mumbai project and further investment was required to expand the Bengaluru airport at the same time.
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BIAL has already received a permission from the authorities for building another runway and a new terminal in another three years since the existing terminal has already reached saturation point.
According to the company, capacity optimisation and real estate development will be the key focus areas for the existing Mumbai airport in the days to come and funds will be required for that as well.
“The airport is now ready for another phase of expansion with a new runway and a new terminal to be constructed. However, we have decided to part ways with BIAL as deleveraging is top priority,” added Reddy.