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Gautam Adani's Adani Group is in talks to buy out the GVK group’s stake in Mumbai International Airport Ltd (Mint)
Gautam Adani's Adani Group is in talks to buy out the GVK group’s stake in Mumbai International Airport Ltd (Mint)

Adani in talks to buy GVK’s 50.5% stake in Mumbai airport

Talks between the two groups have begun and an announcement on the deal is likely to be made in coming weeks

The Adani Group is in talks to acquire the GVK group’s stake in Mumbai International Airport Ltd (MIAL), PTI reported on Monday.

The group controlled by billionaire Gautam Adani plans to acquire the 50.5 % stake held by the GVK Group in MIAL and a further 23.5% from GVK’s minority partners—Airports Company South Africa (ACSA) and the Bidvest group, giving it majority control of the second-busiest airport in the country, according to the report. The remaining 26% stake is held by state-run Airports Authority of India (AAI).

Initial talks between the two business groups have begun and a preliminary announcement regarding the deal is expected to be made in the coming weeks, according to PTI.

The Adani Group had in March 2019 agreed to buy South African company Bidvest’s 13.5% stake in MIAL for 1,248 crore, indicating its interest in running the airport. GVK, however, blocked the deal claiming the right of first refusal, although it was not able to exercise the right by making a matching offer.

In October, GVK agreed to sell its 79% stake in GVK Airport Holdings for 7,614 crore to the Abu Dhabi Investment Authority, Canada’s Public Sector Pension Investments, and state-owned National Investment and Infrastructure Fund.

GVK is expected to use the proceeds from this sale to retire the debt obligations of its holding companies and fend off a takeover battle for MIAL from the Adani Group. The agreement is, however, still to be executed. The Economic Times reported on Monday that this investor consortium has agreed to give a ‘carve-out’ to the promoters of GVK, the Reddy family, so as to allow them to sell stake in MIAL.

News reports of a possible deal between GVK and Adani come after the Central Bureau of Investigation last week charged the GVK Group with siphoning off funds worth 705 crore and causing a loss of 310 crore to the exchequer by entering into fake work contracts on land given by the government to MIAL.

The potential takeover also throws into question the future of the proposed Navi Mumbai airport project, where MIAL had been the successful concessionaire. GVK, the majority partner in MIAL, is negotiating the financial closure for building the 17,000-crore airport with State Bank of India.

Adani Enterprises Ltd (AEL), the Adani Group flagship, has meanwhile won the operations and development rights over a 50-year lease for the Ahmedabad, Lucknow, Mangaluru, Jaipur, Thiruvananthapuram, and Guwahati airports, the first round of privatization that was held by the Union government in February 2019. AEL won the contracts after offering to share the highest revenue-per-passenger with AAI.

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