GMR Infrastructure Ltd. today announced that a consortium of a Tata Group company, Singapore’s sovereign wealth fund GIC, and SSG Capital Management have agreed to invest around Rs 8,000 crore in its airports business.
GMR Airports Ltd. will receive an equity infusion of Rs 1,000 crore, of which Rs 7,000 crore will be used to purchase its shares from the listed entity and its subsidiary. GMR said the proposed investment is subject to definitive documentation, lender consent, regulatory approvals, and other approvals.
The company plans to de-merge its airports business—which contributes 60 percent of its revenue—into a separate entity from its energy, highways, urban infrastructure, and transportation businesses.
GMRAt the close of the investment, Infra would hold a 54 percent stake in its airport business, while Tata Group, GIC, and SSG would own 20 percent, 15 percent, and 10 percent sta stakes, respectively management said the move would lead to deleveraging at GMR Infra and pave the way for a res demerger-style business restructuring proposed investment…will reduce our debt substantially, strengthening our balance sheet,” its Managing Director and Chief Executive Officer Grandhi Kiran Kumar said.
GMR Infra will retain management control over the airport’s business, with the investors having customary rights and board representation at GAL and its key subsidiaries. The company has a net debt of about Rs 20,000 crore, of which Rs 6,800 crore is due to the airport arm.
The deal values GMR Airports at an equity valuation of Rs 18,000 crore. As of Tuesday’s close, GMR Infra’s market capitalization was Rs 11,740 crore.
GMR said then-outs of up to Rs 4,475 crore led to achieving certain agreed-upon milestones and performance metrics over the next five years. The management said that assuming all earn-outs are successfully consummated, the total valuation for the airports on a post-money basis will be Rs 22,475 crore.
Last month, GMR constituted a subcommittee on its board to consider a possible spin-off of the airport business, as it sees a $100-billion investment opportunity in India.
