Gautam Adani's Adani Group announced on Monday that it has acquired a 74% stake in Mumbai International Airport. Even as it is embroiled in a controversy regarding Thiruvananthapuram International Airport, Adani becomes the largest private airport operator in India with this stake.
In a filing with the exchanges, Adani on Monday said it has reached an agreement to acquire GVK Group's shareholding and control of Mumbai airport. It has "entered into an agreement to acquire the debt of GVK Airport Developers," Adani Enterprise said in a regulatory filing.
GVK Group holds 50.50% equity stake in Mumbai International Airport Limited (MIAL). The debt will be converted into equity. GVK also holds a 74% equity stake in the upcoming Navi Mumbai International Airport Limited.
In addition to this, Adani is acquiring a 23.5% equity stake from the Airports Company of South Africa (ACSA) and Bidvest. ACSA holds 10% and Bidvest holds 13.5% in MIAL.
"The Adani Group will also take steps to complete the acquisition of a 23.5 per cent equity stake from ACSA (Airports Company of South Africa) and Bidvest in MIAL for which it has obtained Competition Commission of India's approval," it said.
Together with 50.50% stake of GVK, Adani's total holding in Mumbai airport will be 74% after completion of the transaction. The balance 26% stake is held by the Airports Authority of India.
“Upon the acquisition of the debt of GVK ADL, Adani Group will take steps to obtain necessary customary and regulatory approvals, as may be required, to acquire controlling interest in MIAL,” the Adani group said.
In a separate filing, GVK said it has "agreed to cooperate with Adani Airport Holdings Ltd (AAHL)" under which the Adani Group firm will acquire debt from various lenders including a Goldman Sachs led consortium and HDFC.
This debt will be converted to equity at mutually agreed terms, it said.
Adani said it will infuse funds into MIAL as well as help achieve financial closure of Navi Mumbai International Airport so as to commence its construction. MIAL holds 74 per cent interest in the airport.
GVK Reddy, founder and Chairman, GVK said, "The aviation industry has been severely impacted by COVID-19, setting it back by many years and has impacted the financials of Mumbai International Airport Ltd.
It was therefore important, that we bring in a financially strong investor in the shortest possible time to improve the financial position of MIAL, as well as to help achieve financial closure of the Navi Mumbai International Airport project, which is a project of national importance."
"When the transaction is consummated, which is subject to customary approvals, we would be reducing a significant portion of liabilities to our lenders, which is of utmost importance to the group," he said.
Adani Group had in March 2019 agreed to acquire 13.5 per cent stake of South African company, Bidvest for Rs 1,248 crore. However, GVK Group blocked the deal claiming the right of first refusal.
GVK, however, could not bring money to the table to buy Bid Services Division Mauritius' (Bidvest) stake and the matter went to court.
With GVK Group's finances under strain, it has now come around to the idea of selling the stake to Adani Group.
In October, debt-laden GVK Group entered into an agreement to sell 79 per cent of its stake in GVK Airport Holdings for Rs 7,614 crore to the Abu Dhabi Investment Authority (ADIA), Canada's Public Sector Pension (PSP) Investments, and state-owned National Investment and Infrastructure Fund (NIIF).
Proceeds from this transaction were to be used by GVK to primarily retire the debt obligations of its holding companies.
GVK said has "notified ADIA, NIIF and PSP that the transaction documents stand terminated as it is no longer effective and implementable."
"The reason for this decision was (a) the terms of the transaction envisaged in the transaction documents were not implementable and (b) the alternative proposals discussed would not provide a resolution to the lenders of ADL by the end of August, which was a requirement of our lenders," it added.
The deal comes after the Central Bureau of Investigation (CBI) earlier this month charged the GVK Group with siphoning off funds totalling Rs 705 crore. It is charged with causing a loss of Rs 310 crore to the exchequer by entering into fake work contracts on the land given by the government to MIAL.
Adani Enterprises in its annual report unveiled its ambition to be the largest private airport developer in the country by developing world-class infrastructure at airports, both at airside and landside, enhancing the passenger experience, creating entertainment destinations (airport village, hotels, and malls).
To achieve the aim, it also plans to increase domestic airline connectivity to new and under-served destinations, and also raise the number of flights to long-haul destinations in the west and also to south-east Asia.
Adani Enterprises earlier won the rights to run six airports — Lucknow, Ahmedabad, Jaipur, Mangaluru, Thiruvananthapuram and Guwahati.
Prior to this, the GMR Group was the largest private airport operator, operating Delhi and Hyderabad airports.
With inputs from PTI