GMR Infrastructure on Monday said it has settled an ongoing arbitration with its private equity investors, including SBI Macquarie and Standard Chartered, giving them 5.86% equity in GMR Airport and a cash payment of Rs 3,560 crore.
Private equity (PE) investors — SBI Macquarie, Standard Chartered Private Equity, JM Financial Old Lane and others (investors) — had invested Rs 1,478 crore in the form of compulsorily convertible preference shares (CCPS) in GMR Airports in FY11 and FY12.
Arbitration proceedings were administered by the Singapore International Arbitration Centre.
“Pursuant to the settlement agreement, all parties decided to withdraw the ongoing arbitration and pursuant to binding agreements giving effect to the terms of the settlement, the investors would acquire 5.86% of GAL at a 100% valuation of Rs 21,000 crore and receive a payment of Rs 3,560 crore in lieu of their entire CCPS,” GMR said in a statement. It said the cash payment would be partly funded by GIL through sale of its certain airport-related equity ownerships to GAL.
GMR was in talks with private equity players and other funds and NBFCs to raise the interim funding of Rs 1,500 crore to settle the dispute with PE players, sources said. Its reported deal with AION Capital fell through and this interim funding was secured with a private bank, according to market information.
GIL will sell its entire shareholding of 40% in CEBU airport in the Philippines at a 100% valuation of $590 million. It will also sell its entire shareholding of 50% in Clark EPC project in the same country at a 100% valuation of $9.7 million and its entire shareholding of 40.1% in Delhi Airport Parking Services at a 100% valuation of Rs 499 crore.
“The aforesaid shareholdings are being acquired by GAL based on valuations by Duff & Phelps. GAL would fund these acquisitions by a fresh issue of non-convertible debentures of Rs 2,005 crore subscribed by the investors and/or certain of their affiliates,” the company said.
“We remain committed and bullish on the airport infrastructure business opportunities which encompass growth of consumer business and commercial property business surrounding the airport,” GBS Raju, chairman, airport sector, GMR group, said.
Analysts said the share dispute with private equity investors was a big overhang on GMR, and this in a way clears the path for the company to take the IPO route, if and when it desires. This will also allow deleveraging the balance sheet of the holding company and unlock value of the airport business.
GMR’s airport portfolio, both greenfield and brownfield, has around 160 million passenger capacity in operation and under development along with a few international airport projects in the Philippines and Heraklion Airport at Crete in Greece.