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GMR airport sells 49% stake for Rs 10,780 cr to France's Groupe ADP; move to help reduce debt burden

FP Staff

GMR Infrastructure on Thursday announced that France's Groupe ADP will acquire 49 percent stake in its airport business for Rs 10,780 crore, a move that will help the group reduce debt burden. French airports operator ADP develops and manages airports, including Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget, a PTI report said.

"The first tranche of Rs 5,248 crore will be received by GMR Group immediately. This money will help deleverage the group further and result in improved cash flows and profitability," the group said in a statement.

Under a share purchase agreement, Groupe ADP would have 49 percent stake in GMR Airports Ltd (GAL) for an equity consideration of Rs 10,780 crore. This values GAL at the base post-money valuation of Rs 22,000 crore.

Out of the total amount, Rs 9,780 crore would be towards secondary sale of shares by GMR group and Rs 1,000 crore would be equity infusion in GAL, as per the statement.

"As part of the terms of transaction, GMR will retain management control over the Airports Business with Groupe ADP having the customary rights and Board representation at GAL & its key subsidiaries," it said.

Citing 2019 passenger statistics, the statement said the combined passengers handled by GMR Airports and Groupe ADP stands at 336.5 million, "the highest across the world".

GMR Airports has a portfolio of seven airports in three countries: India€"Indira Gandhi International Airport in New Delhi, Hyderabad's Rajiv Gandhi International Airport; Mactan Cebu International Airport in partnership with Megawide in Philippines and Greece.

ADP said the Delhi and Hyderabad airports in India and the Mactan-Cebu airport in the Philippines together handled a total of 102 million passengers in 2019, Reuters said.

The four other airports, which had 22 million passengers in 2019, are either under development (Goa and Heraklion) or were recently won by GMR after a bidding process (Nagpur and Bhogapuram).

ADP said the acquisition was in line with its strategy of buying airports in countries with fast-growing air traffic. The deal will be paid for in cash and, if appropriate, financed through loans, the firm said.

"The partnership with Groupe ADP is in line with GMR's business direction to become a global airport developer and operator... With Groupe ADP, GMR will have smoother access to global markets, opening up newer avenues of business growth," GMR Group Chairman G M Rao said.

Augustin de Romanet Chairman and CEO of Aéroports de Paris SA-Groupe ADP said the acquisition of 49 percent stake in GAL fits within Groupe ADP's strategy.

"Groupe ADP has also pegged earn-outs up to Rs 4,475 crore linked to achievement of certain agreed operating performance metrics as well as on receipt of certain regulatory clarifications over next five years.

"Thereby, total valuation assuming all above earn-outs are successfully consummated, may reach Rs 26,475 crore on post money basis," the statement said.

Airports at Mopa in Goa and at Heraklion, Crete, Greece in partnership with GEK Terna, are under development by GMR Group.

"This acquisition is a transforming position for the group in one of Asia's most dynamic and promising countries," ADP chief executive Augustin de Romanet said.

Air traffic in India is expected to rise by 6.5% per year on average between 2018 and 2038, with international traffic alone seen growing on average by 6.7% per year, ADP said.

The company said the deal would unfold in two phases, with the acquisition of a 24.99% stake in the coming days. The second phase, for 24.01%, is subject to regulatory approval, notably from the Reserve Bank of India. It will be concluded in the coming months.

Once the deal is completed, ADP will jointly own GMR Airports with GMR Infrastructure Limited, which will keep a 51% stake and retain control of the company. ADP will be granted highly extended governance rights.

In the fiscal year ending on March 1, 2019, GMR Airports had core earnings of 205 million euros on revenue of 715 million euros, ADP said.

In 2019, ADP handled more than 108 million passengers in Paris and more than 110 million passengers in airports abroad. In 2019, ADP earned net income of 588 million euros on revenue of 4.7 billion euros.

--With inputs from agencies


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