Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Politics / News/  DLF picks Frankfurt’s Fraport as partner for foray into airports
BackBack

DLF picks Frankfurt’s Fraport as partner for foray into airports

DLF picks Frankfurt's Fraport as partner for foray into airports

Premium

Real-estate developer DLF Ltd is attempting a fresh foray into airport modernization, joining the rush to cash in on infrastructure building in an economy expanding at a rate of more than 9% a year.

It has chosen Germany’s Fraport AG Frankfurt Airport Services Worldwide, the owner and manager of Frankfurt Airport, as its partner.

According to DLF’s filing with the stock market regulator, as part of a planned sale of 175 million shares to the public, the two companies signed a memorandum of cooperation in April to explore airport projects. A special purpose vehicle, “DLF Fraport SPV", has been set up to focus on the development and management of airports in India. The shareholding of DLF and Fraport in the special purpose vehicle (SPV) will at least be 26% each.

Rajeev Talwar, group executive director, DLF, confirmed the development. “When the memorandum of cooperation becomes an agreement, we could have other partners too in the SPV," he said. He, however, declined to give names of the partners or the investment details, saying it was too early to comment on it.

Fraport is already present in India through the consortium it formed with infrastructure conglomerate GMR Group and the India Development Fund to bid for the modernization of the Mumbai and Delhi airports. GMR-Fraport eventually won the modernization bid for the Delhi airport in early 2006. It is unclear whether GMR’s existing tie-up with Fraport will raise any issues in terms of the proposed SPV with DLF. Fraport said it could not comment on that issue.

India is modernizing and redeveloping 35 airports to meet the needs of a growing number of airlines, planes and passengers. There at least eight domestic airlines operating in a country where 15 years ago, there was only one.

Planes in major cities such as Delhi and Mumbai are usually put in a holding pattern over the cities for 30 minutes to an hour as they await their turn to land on ever crowded runways in peak hours. The country has some 449 airports and airstrips but only 61 airports are actively used.

According to DLF’s draft prospectus, the SPV it has formed has agreed to jointly bid for the Chennai airport. The combined entity also plans to bid for developing and managing greenfield airport projects including one in south Gujarat and the dedicated general aviation airport in Delhi (a general aviation airport handles private aircraft, helicopters and charter flights, apart from small cargo planes).

The two companies will also look at the upgrading and modernization of non-metro airports. There are around 35 non-metro airports in India.

DLF has been eyeing, without concrete results, airport redevelopment for some years. In July 2004, it tied up with the Malaysian Airport Holding Bhd to bid for the privatization of the Delhi airport.

This joint venture was, however, terminated in April 2005. Later, in 2005, DLF joined the consortium led by Bharti Group and Changi Airport of Singapore for the modernization and upgrading of the Mumbai and Delhi airports. But this group decided to withdraw from bidding for the airports as Changi Airport felt some conditions in the bidding were too rigid.

Fraport is one of the leading companies in the international airport business. The company posted a revenue of €2.12 billion (Rs11,660 crore) and a profit of €0.23 billion (Rs1,265 crore) for 2006.

DLF also has a 50-50 joint venture with UK’s infrastructure and construction group Laing O’Rourke to execute DLF’s mega infrastructure projects. The joint venture with Laing O’Rourke will, however, not overlap with the company’s SPV with Fraport, said a DLF spokesperson.

“The Laing O’Rourke joint venture is only for construction and execution of DLF’s projects," the spokesperson clarified. “We might use Laing O’Rourke’s expertise in the construction business for our airport projects. But we are not bidding for projects with them."

shabana.s@livemint.com

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 08 Jun 2007, 01:08 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App