In a sign of growing consolidation in the Indian airports sector, Adani Group has acquired a 74% stake in Mumbai International Airport Limited, a public-private partnership venture that operates India’s second-largest airport.
The stakeholders in the joint venture include the state-run Airports Authority of India (26%), infrastructure major GVK Group (50.5%), and a few other entities such as Airport Company of South Africa (10%) and Bidvest (13.5%). In a regulatory filing, Adani Group said its holding company, Adani Airport Holdings Limited, will acquire a 50.5% stake of GVK group in the joint venture and 23.5% stake of minority partners Airport Company of South Africa and Bidvest.
According to the agreement, Adani Airport will acquire the debt of GVK from its airport lenders – HDFC Bank and YES Bank, and take steps to obtain necessary customary and regulatory approvals to acquire a controlling interest in the joint venture.
This move will make the Adani group the second-largest private airport operator after GMR group, which operates Delhi and Hyderabad airports. It has already received permission to operate the Lucknow, Jaipur, Guwahati, Ahmedabad, Thiruvananthapuram and Mangaluru airports through the public-private partnership model. The group also runs 10 ports in six states and is the country’s largest privately-owned commercial port operator.
The acquisition will also give Adanis ownership of the upcoming Navi Mumbai airport, which the joint venture holds a 74% stake in.
Earlier, GVK had tried to block the sale, citing their right to first refusal, but it could not get enough funds to buy the Bidvest stake. But GVK’s signing of a deal with Adani will complicate its past agreement with a consortium of lenders to which it had earlier sold a 79% stake in its holding company, GVK Airport Holdings. Though the consortium had last year agreed to inject 170 billion rupees, the funding didn’t materialize.
The consortium comprising Abu Dhabi Investment Authority, Canada’s Public Sector Pension Investments, and state-owned National Investment and Infrastructure Fund has served a legal notice to the GVK group and lenders saying that selling a stake in Mumbai International Airport to Adani group will be a breach of the agreement they had entered in October 2019.
In a statement, Adani group said it intends to inject funds into Mumbai International Airport to ensure that the joint venture receives much needed liquidity and also achieves financial closure of Navi Mumbai International Airport to begin construction.
GVK founder and chairman GVK Reddy said the aviation industry has been severely affected by Covid-19 and it has impacted the financials of the joint venture. He added that the deal with Adani Group was to bring in a financially strong investor in the shortest possible time to improve the financial position of the airport venture.