GVK divests 33% stake in Bangalore International Airport Limited to Fairfax Group
Upon completion of this transaction, there would be a reduction of debt burden of around Rs. 2,000 Crore and would also result in saving of interest cost to the extent of approximately Rs. 300 Crore per annum.
The transaction is subject to customary closing conditions and third party
consents, including lender consents, and is expected to be completed by the middle of 2016.
GVK Airport Developers, a wholly owned subsidiary of GVK Power & Infrastructure, had initiated a financing process last year to reduce its debt obligations to its lenders. The infrastructure major received multiple offers, from which the Fairfax Group was selected.
Dr. GVK Reddy, founder Chairman and Managing Director, GVK commenting on this development said in a statement, “This is an important and successful milestone in deleveraging our balance sheet, and all proceeds from this stake sale shall be used to bring down our debt obligations to our lenders. We chose Fairfax as a partner in BIAL as we have a long standing relationship with its Chairman, Prem Watsa and we would look forward to partnering with them in developing Kempegowda International Airport through its next stage of expansion as we develop a new world-class Terminal 2 and a new runway.”
"We have great admiration for GVK, led by Dr. GVK Reddy and G V Sanjay Reddy, in the outstanding work that they have done to develop Kempegowda International Airport to its current stature. This is a partnership between Fairfax and GVK. We will work closely with all stakeholders to manage our stake in BIAL going forward, and will support G V Sanjay Reddy to continue to lead the management team as Managing Director (MD) of BIAL and Dr GVK Reddy
will continue as Co Chairman of BIAL” said Prem Watsa, Chairman of Fairfax India, and Chairman and CEO of Fairfax.
Bangalore International Airport Limited owns and operates the Kempegowda International Airport Bengaluru (KIAB), under a 30+30 year concession agreement from the Government of India. KIAB has the distinction of being the first greenfield airport in India that was built to the highest international standards by the private sector under a public-private partnership.
The airport began operations in May 2008 and has been adjudged as the ‘Best Regional Airport in Central Asia’ by Skytrax in 2015.
GVK shall remain a long term investor and pioneer in airport assets in India. GVK is bullish on the airport sector in India and shall continue to build iconic assets for the country.
Goldman Sachs and DSP Merrill Lynch are the financial advisors to GVK and Cyril Amarchand Mangaldas is the legal advisor to GVK.
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