GMR reaches settlement with investors in airport business
Private equity investors in India’s GMR Airports (GAL) will receive INR35.6 billion ($481.3 million) in cash plus additional equity in compensation after the company failed to deliver a liquidity event within an agreed timeframe.
SBI Macquarie, Standard Chartered Private Equity, JM Financial Old Lane and other investors committed INR14.8 billion to GMR Airports in 2011 and 2012 through a subscription to compulsorily convertible preference shares. It was agreed an exit would take place by 2015 in the form of an IPO or a share buyback. When the exit did not materialize, the investors began arbitration proceedings.
The parties have now reached a settlement agreement whereby the preference shares will be redeemed by GMR Infrastructure for the cash payment and a 5.86% equity interest in GAL that values the business at INR210 billion.
GMR Infrastructure said it would fund part of the deal by selling its stakes in two airport assets in the Philippines – Cebu airport and an expansion project for Clark International Airport – and Delhi Airport Parking Services to GAL for approximately $268 million. GAL will finance these acquisitions by issuing INR20 billion in non-convertible debentures.
During the investment period, GAL’s portfolio has expanded from two airport assets to six, including the pending acquisition of Nagpur Airport. G.B.S. Raju, chairman of GMR Group’s airport sector, said in a statement that the company remains “committed and bullish on the airport infrastructure business opportunities which encompasses growth of consumer business and commercial property business surrounding the airport.”
GMR Group has interests spanning airports, energy, transportation and urban infrastructure. It has airport assets in operation and under development with around 160 million in passenger capacity. These include Indira Gandhi International Airport in New Delhi, Hyderabad’s Rajiv Gandhi International Airport, and Mactan Cebu International Airport, which is run in partnership with Megawide. There are also greenfield projects in Goa, Greece, and the Philippines.
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