Mumbai: GMR Infrastructure Ltd, the operator of India’s second busiest airport, plans to buy airports in eastern Europe and West Asia, where accelerating economic growth is driving demand for air travel.
The company is considering a final bid for airports in St Petersburg in Russia and Prague in the Czech Republic, said chief financial officer Ashutosh Agarwala. GMR proposes to sell shares in a company that will own overseas assets within five years, he had said on Tuesday.
Global ambition: The new international airport in Hyderabad developed by GMR Infrastructure. The company is looking to cash in on the growing air travel market in West Asia and eastern Europe. Photograph: Mahesh Kumar A / AP
Bidding for airports in emerging markets is part of GMR’s plan to spend $10 billion (Rs41,900 crore) on overseas acquisitions in industries, including power and infrastructure. Bangalore-based GMR in June bought 50% of Dutch utility InterGen NV for $1.1 billion and last year won a €1.93 billion (Rs12,506 crore) bid to manage an airport in Istanbul, Turkey’s cultural and financial centre.
“Indian companies are trying to ride on the growth in Eastern Europe,” said Jayesh Shroff, who helps manage the equivalent of about $4 billion at SBI Asset Management Co. in Mumbai. “There will also be a lot of learning experience.”
Economies in West Asia, helped by a 64% surge in crude oil price in the past year, are spending billions of dollars to expand their airports. Ten West Asian airports are investing $37 billion to boost capacity to accommodate an additional 318 million passengers a year by 2012, James Hogan, the chief executive officer of Etihad Airways, had said in February.
GMR Infrastructure, which in 2006 sold stock to billionaire George Soros and Citigroup Inc., fell 0.8% to Rs100.60 at close of trading in Mumbai. The stock has declined 59% so far this year.
The company operates the New Delhi airport with Fraport AG, after buying the asset from the government in January 2006. It developed and operates an airfield in Hyderabad in partnership with Malaysia Airports Holdings Bhd.
“We would like to add at least two more airports to our portfolio in the next five years,” Agarwala said.
GMR has been shortlisted for managing the Pulkovo airport in St Petersburg, Russia, Agarwala said. Singapore’s Changi Airport, Hochtief AG and Fraport are among the nine bidders, Vedomosti newspaper had reported on 1 August, citing an auction document.
The company is also evaluating the Prague airport, which the Czech government plans to sell to a strategic partner. The government had said on 2 June that it would sell Letiste Praha SP, operator of the Prague airport, to raise at least 100 billion koruna (about Rs26,800 crore).
“We would be looking at airports that have the potential for scaling up,” Agarwala said. “That involves some risks, but you will get a higher return.”