Bangalore International Airport (BIAL), the operator of Kempegowda International Airport, Bengaluru (KIAB), is believed to be in talks with investment bankers to explore the possibility of tapping the dollar bond market, sources aware of the matter told FE.
According to investment bankers, BIAL is in early-stage talks with bankers for a possible dollar bond issue, which on execution would be a debut issue for the company in the overseas bond market.
“The company is in early stage talks and is exploring the possibility of a dollar bond issue. If the issue happens, it will be a high yield one and also a debut issue by BIAL. The firm is likely to look at an issue size of $300-500 million,” said a banker.
KIAB is the third-busiest airport in India and the fastest growing airport in the country, according to the company’s website.
FIH Mauritius Investments, a wholly-owned subsidiary of Fairfax India Holdings Corporation, holds 48% stake in BIAL where as 26% is held by Siemens Project Ventures.
Karnataka State Industrial & Infrastructure Development Corp and Airports Authority of India each hold 13% in the company. Hari Marar, MD and CEO of BIAL, replied to a text message saying there are no immediate plans for a bond issue but the company is exploring various options for their upcoming capex programme.
A media spokesperson for the company said in an email response that BIAL has no specific plans for an international bond issue. “While various fundraising options for CapEx funding are being explored, we cannot comment on the cost of funding at this stage,” the email stated.
BIAL is in the process of constructing a new terminal (T2), which is expected to be operational from mid-2021. The terminal will be constructed in two phases—the first phase will cater to 25 million passengers annually while the second phase will add another 20 million passengers.
BIAL is also in the process of building a second runway, which is expected to be operational in 2019. BIAL stated that by the end of 2017, the airport clocked 25.04 million passengers, recording a growth of 12.9% year-on-year. In the same year, the airport handled 339,461 tonne cargo.
Over the last two years, couple of dollar bond deals have materialised from the airports sector. In 2017, GMR Hyderabad International Airport raised $350 million by issuing 10-year dollar bonds at 4.25%. In 2016, GMR’s Delhi International Airport tapped the dollar bond market to raise $522.60 million by issuing 10-year bonds at 6.125%.
Mumbai International Airport is also