GVK Power and Infrastructure has decided to sell its residual 10% stake in Bangalore International Airport Ltd to Fairfax India Holdings Corporation for ₹1,290 crore (approximately $ 200 million) to pare its debt.
The stake is being held by its subsidiary, Bangalore Airport Infrastructure Developers Private Ltd., and the transaction may be completed by early July, according to the company. The proceeds will be used to further reduce the debt obligations of GVK.
GVK had in March closed a deal, signed during March 2016, with Fairfax India to sell a 33% stake in BIAL. It had then retained a 10% stake and the management of BIAL.
“We have decided to part ways with BIAL as de-leveraging is the top priority,” founder Chairman and Managing Director of GVK G.V.K. Reddy said.
The airport sector, however, will continue to be a core focus area for GVK. The Government’s focus on developing the aviation sector also presents attractive growth opportunities and “we are evaluating these,” he said in a statement.
GVK took up BIAL in 2010 when the airport was going through a tough phase with the capacity severely constrained, Mr. Reddy said, adding that over the last seven years “we have worked very hard to transform BIAL into a world-class airport. The airport is now ready for another phase of expansion with a new runway and a new terminal to be constructed.”
The immediate focus of GVK will now be on Mumbai and Navi Mumbai airports and on selectively evaluating privatisation opportunities.
The reduced debt burden would provide it flexibility and management bandwidth to focus on these projects. Capacity optimisation and real estate development would be the key focus areas for the existing Mumbai airport. “Having won the bid for the Navi Mumbai airport, we are excited to deliver yet another world-class airport,” Mr. Reddy said.
Thanking Karnataka Government, the Centre, AAI and all stakeholders for working closely with GVK, he said BIAL will continue to keep pace with the growing demand of Bengaluru in the coming years.
