Adani Group moves Bombay HC seeking to stop investment into GVK Airport Holdings

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Published: November 6, 2019 5:00:22 AM

The move follows GVK’s announcement last week that a subsidiary of National Infrastructure Investment Fund (NIIF), Abu Dhabi Investment Authority (ADIA) and Canadian Public Sector Pension Investment Board (PSPIB) will invest Rs 7,614 crore into GVK Airport Holdings, the holding company of MIAL.

Adani Group, Bombay High Court, GVK Group, GVK Airport Holdings, Bid Services Division, RoFR, MIALAccording to GVK’s counsel, a deposit of around Rs 1,254 crore was made into an escrow account on October 29.

The Adani Group on Tuesday moved the Bombay High Court (HC) seeking to restrain the GVK Group from completing an investment transaction of GVK Airport Holdings, the holding company of Mumbai International Airport (MIAL), without first giving a notice on right-of-first-refusal (RoFR) to Bid Services Division (Mauritius), which holds 13.5% in the airport.

The move follows GVK’s announcement last week that a subsidiary of National Infrastructure Investment Fund (NIIF), Abu Dhabi Investment Authority (ADIA) and Canadian Public Sector Pension Investment Board (PSPIB) will invest Rs 7,614 crore into GVK Airport Holdings, the holding company of MIAL.

The Adani Group and GVK, which currently holds 50.5% stake in MIAL, have since March been engaged in legal tussle to buy out Bid Services’ stake in one of the world’s busiest airports. The Adani Group’s counsel, Darius Khambatta, on Tuesday told the court that the group was willing to immediately transfer the agreed upon price of Bidvest’s stake, if certain conditions are met. In March, Adani Properties and Bid Services entered into a share purchase agreement for 13.5% stake in MIAL for around `1,248 crore.

Meanwhile, GVK, which as per the MIAL shareholders agreement had RoFR in case any shareholder wanted to sell their stake, had been given time by an arbitration tribunal till October 30 to deposit an amount matching Adani’s offer for Bidvest’s stake.

According to GVK’s counsel, a deposit of around Rs 1,254 crore was made into an escrow account on October 29. The arbitration tribunal will adjudicate on the matter on November 24. Tuesday’s hearing was a continuation of an earlier suit filed in September 4 by the Adani Group seeking to that the Bombay HC declare a share purchase agreement between the company and Bidvest to buy out Bid Services’ stake in MIAL as “valid, subsisting and binding.” Further arguments will be heard on Wednesday by a single-member bench of the Bombay HC, presided over by Justice AK Menon.

Khambatta on Tuesday told Justice Menon that the Adani group was willing to immediately transfer for Bidvest’s shares into an escrow account, provided the company urges the GVK group to exercise RoFR before completing the Rs 7,614-crore investment transaction. Janak Dwarkadas, counsel for Bidvest, told the court that the share purchase agreement between Adani Properties and Bid Services was “subject to RoFR” and Bidvest is bound by an injunction order of the arbitration tribunal from transferring shares to the Adani Group.

“Pendency of an arbitration between them (GVK and Bidvest) cannot hold up my transfer,” Khambatta counter-argued. He also said the fund transfer for Bidvest’s shares was conditional on the company extending the long-stop date for their share purchase agreement to February 7, 2020. A long-stop date is the deadline by which two parties must execute an agreement, failing which the agreement lapses. Currently, the long-stop date for the Bidvest-Adani Properties share purchase agreement is November 7.

Khambatta further said the over Rs 7,600-crore investment into GVK Airport Holdings, without RoFR notices to other stakeholders, is in breach of the transfer restrictions clause shareholders agreement between the shareholders of MIAL. Apart from Bidvest and GVK , Airports Authority of India (AAI) holds 26% stake in MIAL and Airport Company of South Africa (ASCA) holds 10% stake.

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