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L&T offers to sell Bial stake at Rs108 a share; 10-fold return

L&T offers to sell Bial stake at Rs108 a share; 10-fold return
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First Published: Fri, Nov 06 2009. 11 46 PM IST

Rich field: The Bangalore airport, the third busiest in the country, has been valued at more than $1 billion within 18 months of opening. Hemant Mishra / Mint
Rich field: The Bangalore airport, the third busiest in the country, has been valued at more than $1 billion within 18 months of opening. Hemant Mishra / Mint
Updated: Fri, Nov 06 2009. 11 46 PM IST
Bangalore / Mumbai: India’s largest engineering firm Larsen and Toubro Ltd (L&T) has offered to sell part of its 17% stake in Bangalore International Airport Ltd, or Bial, to its partners at Rs108 a share, giving it a return of more than 10 times, two people familiar with the development said.
Rich field: The Bangalore airport, the third busiest in the country, has been valued at more than $1 billion within 18 months of opening. Hemant Mishra / Mint
Mumbai-based GVK Power and Infrastructure Ltd, which acquired a 12% stake in the project from Zurich Airport, one of the promoters, has said it will buy more shares as part of its plan to take control of the south Indian airport. L&T will sell 12% stake in Bial, but the promoters of the airport would have the first right of refusal.
“The time frame for refusal ends on 19 November. After that they can sell it in the open market,” one Karnataka government official said. He did not want to be named as he was not authorized to speak to the media. L&T spokesperson D. Morada denied there was any stake sale plan. “It’s all in the realm of speculation.”
The Bangalore airport, the third busiest in the country, has been valued at more than $1 billion (Rs4,680 crore) within 18 months of opening. It handled 8.7 million passengers in its first year.
Sanjay Reddy, vice-chairman of GVK Power, said his company will be keen to acquire L&T’s stake if the existing shareholders of Bial are willing to forgo their right of refusal.
“We are looking at how we can utilize the investments and our first focus would be on how we can add value to this project,” he said.
In 2005, the public private partnership project had an equity of Rs326.7 crore, nearly three-fourths held by the private consortium led by Siemens Project Ventures. Siemens has invested Rs130.68 crore for its 40% holding in Bial, while Zurich and L&T invested Rs55.54 crore each for their 17% stake.
Siemens needs to stay invested for at least three years, before it can dilute up to 14% and seven years before it exits the venture. Zurich can sell up to 12% a year after the airport opens.
On Thursday, Zurich sold its 12% stake to GVK for Rs484.6 crore.
L&T does not have a lock-in period.
According to a senior analyst with domestic brokerage, GVK could face regulatory hurdles in acquiring a majority stake.
“There could be issues when the original promoters are lowering their stake, according to the terms and conditions,” he said, not wanting to be identified since he is not authorized to speak to the media. “Also, it is hard to make a judgement call as we do not know the profitability aspects of the airport.”
GVK’s Reddy said that with the 12% acquisition, it will have board representation.
“Moreover, we have a strategic alliance agreement with Zurich Airport that will allow us to have some say in the management of Bangalore airport, ” he said.
raghu.k@livemint.com
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First Published: Fri, Nov 06 2009. 11 46 PM IST