Tata, GIC, SSG to pick up Rs 80-bn stakes in GMR’s airport unit

Tata, GIC, SSG to pick up Rs 80-bn stakes in GMR’s airport unit
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New Delhi, Mar 27: After airlines, the Tata Group has now made its foray into the airport sector. Tatas, GIC and SSG Capital Management will invest Rs 8,000 crore in infra major GMR’s airport arm, valuing GMR Airports at almost Rs 22,500 crore. The investment will help GMR Group reduce its debt burden as it is currently engaged in developing and expanding airports with in India and abroad.
“GMR Infrastructure Limited (GIL) Wednesday announced a proposed investment by Tata Group, Singapore’s sovereign wealth fund GIC and SSG Capital Management in its airports business. GIL has signed a binding term sheet with the Investors pursuant to which the Investors have agreed to invest Rs 8,000 crore in GMR Airports Limited (GAL),” GMR said in a statement Wednesday.
“The investment amount of Rs 8,000 crore will consist of Rs 1,000 crore equity infusion in GAL and Rs 7,000 crore towards purchase of GAL’s equity shares from GIL and its subsidiaries. The proposed investment is subject to definitive documentation, customary regulatory approvals, lender consents and other approvals,” it added.
Following the investment, GIL proposes to demerge its energy, highways, urban infrastructure and transportation businesses, leading to separation of its airport business. “This is a significant development for GIL with multiple strategic benefits (like) significant deleveraging at GIL; investment by marquee investors for creating a world class portfolio of airport assets and paves the way for restructuring of the business by way of demerger. As part of the terms of the proposed investment, GIL will retain management control over the airports business with the investors having customary rights and board representation at GAL and its key subsidiaries,” the statement said.
“The investors have pegged 100% equity valuation for GAL at… Rs 18,000 crore plus earn-outs of up to Rs 4,475 crore linked to achievement of certain agreed milestones and performance metrics over next 5 years. Thereby, total valuation assuming all earn-outs are successfully consummated, will be Rs 22,475 Crores on Post Money Basis,” it added.