AAI to sell stake in Hyd and B’luru airports
AVIATION & AIRPORTS

AAI to sell stake in Hyd and B’luru airports

The Airports Authority of India (AAI) will sell the 13% stake it holds in GMR Hyderabad International Airport (GHIAL) and Kempegowda International Airport, Bengaluru (Bengaluru International Airport, or BIAL) to raise funds.

The monetisation is planned under the government's national asset monetisation pipeline through which the Budget 2021 has envisaged earning Rs 2.5 trillion. The sale of the stake will also help AAI shore up its finances, severely hit due to the pandemic's impact. The government-owned airport operator—a profit-making public sector enterprise in the civil aviation sector—is likely to post a loss of over Rs 1,000 crore in the financial year (FY) 2021.

The authority will soon appoint a transaction advisor to conduct a valuation of its stake in the two airports in which Fairfax Group and Delhi-based GMR Infrastructure (GMR Infra) hold the largest stake.

As per the shareholding agreement, the largest shareholders have the first right of refusal on the stake. Industry executives and analysts tracking the two firms told the media that Fairfax is a clear favourite to buy the stake.

According to the industry executives, for GMR Infra, which has a consolidated debt of more than Rs 25,000 crore and is selling assets itself, purchasing the stake comes as a challenge if the price is high.

Fairfax and Siemens hold 54% and 20% stake in BIAL, while GMR Infra holds a 63% stake in GHIAL. The governments of Karnataka and Telangana each hold 13% stake in the airports.

A government official told media sources that there are no immediate plans to offload 26% stake in Delhi International Airport (DIAL) or Mumbai Internatio­nal Airport (MIAL), given AAI holds a 26% stake in the two firms. This gives it the power to influence special resolutions, which require at least 75% vote of shareholders.


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Despite the loss, the finance ministry has asked AAI to continue with its capital expenditure (capex) programme, which entails an investment of around Rs 8,000 crore for FY21 and FY22. The capex is largely to develop new airports or upgrade existing airstrips and airport terminals.

The public sector undertaking (PSU) has raised around Rs 3,000 crore from external borrowings, but that may not be sufficient to undertake infra work, leading to the requirement of selling the residual stake in the two airports. AAI also plans to put on sale Tiruchirappalli International Airport, Biju Patnaik Airport, Sri Guru Ram Dass Jee International Airport (Amritsar), Swami Vivekananda Airport, Lal Bahadur Shastri International Airport (Varanasi) and Devi Ahilya Bai Holkar Airport (Indore) by the first quarter (Q1) of FY22.

Analysts and merchant bankers said that the two stakes might fetch the government over Rs 3,000 crore at the current valuation, which is more than the amount it earned by selling the six airports.

Recently, Fairfax sold around 11.5% stake to Canadian pension fund Ontario Municipal Employees Retirement System, valuing 100% stake of BIAL at $2.9 billion. As we have reported earlier, BIAL intends to list Anchorage Infrastr­ucture Investments Holdings, the holding company of BIAL, on the Indian stock exchanges.

Image Source


Also read: Kempegowda Airport to get $2.2 bn investment for infra

The Airports Authority of India (AAI) will sell the 13% stake it holds in GMR Hyderabad International Airport (GHIAL) and Kempegowda International Airport, Bengaluru (Bengaluru International Airport, or BIAL) to raise funds. The monetisation is planned under the government's national asset monetisation pipeline through which the Budget 2021 has envisaged earning Rs 2.5 trillion. The sale of the stake will also help AAI shore up its finances, severely hit due to the pandemic's impact. The government-owned airport operator—a profit-making public sector enterprise in the civil aviation sector—is likely to post a loss of over Rs 1,000 crore in the financial year (FY) 2021. The authority will soon appoint a transaction advisor to conduct a valuation of its stake in the two airports in which Fairfax Group and Delhi-based GMR Infrastructure (GMR Infra) hold the largest stake. As per the shareholding agreement, the largest shareholders have the first right of refusal on the stake. Industry executives and analysts tracking the two firms told the media that Fairfax is a clear favourite to buy the stake. According to the industry executives, for GMR Infra, which has a consolidated debt of more than Rs 25,000 crore and is selling assets itself, purchasing the stake comes as a challenge if the price is high. Fairfax and Siemens hold 54% and 20% stake in BIAL, while GMR Infra holds a 63% stake in GHIAL. The governments of Karnataka and Telangana each hold 13% stake in the airports. A government official told media sources that there are no immediate plans to offload 26% stake in Delhi International Airport (DIAL) or Mumbai Internatio­nal Airport (MIAL), given AAI holds a 26% stake in the two firms. This gives it the power to influence special resolutions, which require at least 75% vote of shareholders. 4th Indian Cement Review Conference 202117-18 March Click for event infoDespite the loss, the finance ministry has asked AAI to continue with its capital expenditure (capex) programme, which entails an investment of around Rs 8,000 crore for FY21 and FY22. The capex is largely to develop new airports or upgrade existing airstrips and airport terminals. The public sector undertaking (PSU) has raised around Rs 3,000 crore from external borrowings, but that may not be sufficient to undertake infra work, leading to the requirement of selling the residual stake in the two airports. AAI also plans to put on sale Tiruchirappalli International Airport, Biju Patnaik Airport, Sri Guru Ram Dass Jee International Airport (Amritsar), Swami Vivekananda Airport, Lal Bahadur Shastri International Airport (Varanasi) and Devi Ahilya Bai Holkar Airport (Indore) by the first quarter (Q1) of FY22. Analysts and merchant bankers said that the two stakes might fetch the government over Rs 3,000 crore at the current valuation, which is more than the amount it earned by selling the six airports. Recently, Fairfax sold around 11.5% stake to Canadian pension fund Ontario Municipal Employees Retirement System, valuing 100% stake of BIAL at $2.9 billion. As we have reported earlier, BIAL intends to list Anchorage Infrastr­ucture Investments Holdings, the holding company of BIAL, on the Indian stock exchanges. Image Source Also read: Kempegowda Airport to get $2.2 bn investment for infra

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