Mumbai: GVK Group is in talks with at least four companies to sell a significant minority stake in Mumbai International Airport Pvt. Ltd, two people directly aware of the discussions said. Four of the potential bidders, namely Singapore’s Changi Airport, German airport operator AviAlliance, India’s sovereign wealth fund National Investment and Infrastructure Fund (NIIF) and Abu Dhabi Investment Authority (ADIA) are in advanced negotiations to buy a stake in Mumbai airport, the people cited above said, requesting anonymity as the talks are private.
The interested parties are expected to make non-binding offers by 10 September when an internal deadline set by Citigroup, which is managing the transaction, ends, the people said.
Alongside GVK Group, South Africa’s Bidvest Group, which has about a 13.5% stake in Mumbai airport has also begun a parallel process to sell its entire stake, said the two people cited above.
GVK’s plan to sell a stake in Mumbai airport is part of its efforts to deleverage and free up cash for new projects such as the ongoing second airport in Mumbai.
GVK Power & Infrastructure Ltd, which runs the airport business through GVK Airports Holdings Pvt. Ltd, had a debt of ₹ 12,854 crore at the end of March.
“The group is looking to raise anywhere between ₹ 4,000 crore to ₹ 6,000 crore from the transaction and will continue to retain a stake in Mumbai airport post the deal,” the first person cited before said. “The transaction value will depend on the overall valuation of Mumbai airport, which is expected to be around ₹16,000 crore or more.”
The second person cited before said “all the four bidders have been given data room access by GVK so that they can finalize their respective bids”.
MIAL runs the Chhatrapati Shivaji International Airport—one of the busiest in India—as a special purpose joint venture company.
A consortium led by GVK holds a 74% stake in Mumbai airport. GVK owns a 50.5% stake, while the Bidvest Group, and Airports Co. South Africa Ltd hold 13.5% and 10%, respectively. The remaining 26% is held by state-run Airports Authority of India (AAI).
Under a 30-year concession, the government granted Mumbai airport the right to operate, maintain and develop Chhatrapati Shivaji International Airport. The airport services the Mumbai metropolitan area. In, 2010, GVK acquired a 13.5% stake from Bidvest paying around ₹650 crore. State-run AAI has the right to buy stakes in Mumbai airport, according to previously agreed terms, before it’s sold to a third party.
Responding to a query from Mint, a spokesperson for Bidvest Group confirmed the development and said the group was looking to exit its investment in Mumbai airport. Spokespersons for Citigroup and ADIA declined to comment.
A spokesperson for AviAlliance said: “AviAlliance is, as a matter of principle, interested in enlarging its portfolio by acquiring stakes in attractive airports. We keep a close eye on the market for new airport projects around the world. At present, however, we do not wish to comment on the possibility of concrete projects or ventures.”
Emails sent to GVK group, NIIF and Changi Airport remained unanswered until press time.
Over the past the few years, GVK has struggled to make debt repayments and has put several of its assets on the block. This includes road and power assets.
In July 2017, GVK Power & Infrastructure sold its residual stake worth ₹ 1,290 crore in Bangalore International Airport Ltd to Canadian billionaire Prem Watsa’s Fairfax India Holdings Corp. In May 2016, the debt-laden infrastructure developer sold a 33% stake in BIAL to Fairfax for ₹ 2,149 crore.
In February last year, GVK won the right to build Mumbai’s second airport in Navi Mumbai, which is expected to cost close to ₹ 14,000 crore to develop. According to the people cited before, GVK has been in talks with potential investors to raise around $1 billion to fund the project’s equity component.