Analysts said the arbitration tribunal will now have to decide GVK Group’s claims over right of first refusal (RoFR) to purchase Bidvest’s share in the Mumbai airport.
The tussle between the Adani Group and GVK to acquire the 13.5% stake held by South African firm Bidvest in the Mumbai International Airport (MIAL) has taken a new turn. The matter, which is before an arbitration tribunal, will now have to take into account the fact that GVK has already raised around Rs 7,600 crore from investors, which puts it in a comfortable position to acquire the stake for which the Adani Group has also thrown in its hat.
Analysts said the arbitration tribunal will now have to decide GVK Group’s claims over right of first refusal (RoFR) to purchase Bidvest’s share in the Mumbai airport. A GVK spokesperson said GVK Airport Holdings (GVKAHL) will be depositing Rs 1,248 crore in an escrow account by October 31 as directed by the arbitral tribunal.
The tribunal had directed GVKAHL to deposit the money to demonstrate its intent of buy out Bidvest’s share. The arbitration tribunal is scheduled take up the matter in the last week of November.
Debt-laden GVK Group on Sunday announced that it will raise Rs 7,614 crore by selling 79.1% stake in its airport business to three investors. GVKPIL has signed definitive agreements with Abu Dhabi Investment Authority (ADIA), Canada’s Public Sector Pension Investment Board (PSP Investments), and the government-backed National Investment & Infrastructure Fund (NIIF).
The investment will help the GVK Group to ring-fence Adani Group’s attempt to purchase Bidvest’s shares in the Mumbai airport and pare holding companies’ debt. GVKPIL had a net debt of Rs 13,600 crore at the end of March 2019.
Following the deal, the GVK Group will hold 20.9% in GVKAHL and the balance will be equally shared between the three investors. Initially, the GVK Group had proposed to sell a 49% stake in its airport business to ADIA and NIIF.
While the GVK owns 50.5% in MIAL, Airports Company South Africa (ACSA) holds 10%, and 26% is with state-owned Airports Authority of India (AAI). GVKAHL had initiated a process to acquire Bidvest’s share in MIAL during February and 10% stake of ACSA on March 22 under right of first refusal (RoFR) in terms of the shareholders’ agreement. GVK’s offer to Bidvest was valued at `1,248 crore while it was ready to shell out Rs 924 crore for ACSA’s holding.
Adani Group had also entered into a share purchase agreement with Bidvest to buy its share reportedly at a higher price. Last month, the Adanis moved the Bombay High Court seeking execution of its agreement with Bidvest. The next date of hearing at the HC is November 5. Earlier this year, the Delhi HC had dismissed GVKAHL’s plea preventing Bidvest from selling its stake to a third party. The court held that the Hyderabad-based group had failed to show any preparedness to purchase the shares.
GVK’s airport business reported a flat growth in profits at Rs 597 crore for 2018-19.