GMR Infrastructure’s efforts to divest around 30-33% stake in its airport business to pare its debt are understood to have got stuck with bids being much lower than what the company was expecting.
According to sources, the GMR Group, which holds around 64% in its flagship, Delhi airport, was planning to raise around $500-700 million through the partial stake sale as it was looking to sell the stake at an enterprise value of around $1.5 billion.
However, interested bidders see this as too high. Sources said that the company has been in talks with global private equity major KKR and Fairfax Financial Holdings of Canada for the stake sale and had wanted to close the deal by March, 2016.
GMR Airports operates Indira Gandhi International Airport in Delhi, and Rajiv Gandhi International Airport in Hyderabad. It has also taken over the Mactan-Cebu International Airport project in the Philippines for renovation, operation and maintenance with a concession period of 25 years.
The company holds 64% stake in the Delhi International Airport (DIAL), 63% in the GMR Hyderabad International Airport (GHIAL) and 40% in Mactan-Cebu International Airport project.
“The kind of valuations that GMR has been seeking is too high for the potential bidders because of the regulatory hurdles and a potential reduction in revenues if airport charges come down by more that 80%,” said a banker directly involved in the negotiations.
GMR Airports contributes around 47% to the the total revenue of the parent firm GMR Infra. In FY16, for GMR Infra, revenues from the airport business increased by 20.92% to Rs 6556.12 crore. The gross debt of GMR Infra at the end of FY16 stood at Rs 39,159 crore.
A GMR Group spokesperson said on the subject, “GMR continuously evaluates financing options and opportunities across businesses. It will be inappropriate to comment on speculative news.”