Tata will hold 14.7% and GIC 19.8%, while SSG’s stake will remain unchanged at 9.9% under new structure
GMR will retain management control of GMR Airports
A consortium led by Tata group working on the acquisition of a stake in GMR Airports Ltd (GAL) for ₹8,000 crore has tweaked the deal structure to make it more palatable to authorities, said two people with direct knowledge of the matter.
The Tata group, Singapore sovereign wealth fund GIC Private Ltd, and Hong Kong-based SSG Capital were to pick up 19.7%, 14.8%, and 9.9%, respectively, in the airport operator, according to the original plan.
Under the new plan, Tata will hold 14.7% and GIC 19.8%, while SSG stake will remain the same at 9.9%. The deal values GAL, the airports business of GMR Infrastructure Ltd, at ₹18,000 crore.
“This enabling provision (to change shareholding) is already provided in the current shareholder agreement, hence there will not be any gap in the inflow of the sale proceeds," said one of the persons mentioned above, who requested anonymity. “The investment process is on track and is expected to be completed in a few weeks," the person said.
The Mumbai-based Tata group and the two foreign entities had earlier this year agreed to invest ₹8,000 crore in GAL.
The deal will pump ₹1,000 crore into GMR Airports and facilitate the purchase of ₹7,000 crore of the airport unit’s equity shares from the parent.
“Tata group’s effective shareholding will now be 10% in Delhi International Airport Ltd, which would mean a shareholding of approximately 15% in GMR Airports. The 5% reduction in Tata’s stake will be taken up by GIC, which will increase its shareholding to approximately 20%," said the second person mentioned above, also on condition of anonymity.
In October, the Airports Authority of India (AAI) had sought the opinion of the solicitor general of India on the legality of Tata group’s plan to acquire a significant stake in GMR Airports, which operates the New Delhi and Hyderabad airports, as it could run afoul of clauses barring domestic airlines from investing beyond a limit in airport operators. Tata group operates full-service carrier Vistara, a joint venture with Singapore Airlines, and budget airline AirAsia India, which is a joint venture with Malaysia’s AirAsia Berhad.
This came in the wake of the Competition Commission of India approving a Tata Realty and Infrastructure arm and its two overseas partners to acquire a significant stake in GAL.
“The revised holding percentage has been submitted to AAI," said the first person mentioned above.
A Tata group spokesperson did not comment on the development. Emails sent to GMR Group, GIC, and SSG Capital did not elicit a response till press time.
After the completion of the deal, the total debt of GMR Infrastructure will reduce to ₹12,000 crore, a top company official had said earlier this year.
Once the deal is done, GMR Infrastructure and its units will hold 53.5% stake in the airports business, while the company’s Employee Welfare Trust will own 2.1%.
The investment is a lifeline for the debt-laden GMR Infrastructure, but it is also a strategic entry point for the Tata group into the airport infrastructure business, which has seen heightened investor interest lately. GMR, which is developing new airports at Mopa in Goa, Nagpur in Maharashtra, Cebu in the Philippines, and Crete in Greece will retain management control of GMR Airports.
GMR has also emerged as the highest bidder for a greenfield airport to be established at Bhogapuram, near Visakhapatnam in Andhra Pradesh.
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