In a late night announcement to the bourses on Thursday, GMR Infrastructure Limited said that Groupe ADP, which operates the Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget, will pick up a 49% stake in its airport vertical, GMR Airports Limited (GAL). The deal is pegged at ₹10, 780 crore and gives GAL a post money valuation of ₹22,000 crore.
The deal comprises of a secondary sale of shares by GMR group for ₹9,780 crore and a ₹1,000 crore equity infusion in GAL. Further, Groupe ADP has also pegged earn-outs of up to ₹4,475 crore that has been linked to achievements of certain agreed operating performance metrics as well as on receipt of certain regulatory clarifications over next five years. The total valuation of GAL, assuming all the above earn-outs are successfully consummated, could touch ₹26,475 crore on a post money basis.
The company said that the first tranche of ₹5,248 crore will be received immediately and will help deleverage the group, improve its cash flows and profitability. GMR has a debt of over ₹20,000 crore.
GAL has around 172 million passenger capacity in operation and under development, comprising of India's busiest airport the Indira Gandhi International Airport in New Delhi, Hyderabad’s Rajiv Gandhi International Airport, and Mactan Cebu International Airport in partnership with Megawide in Philippines. It is also developing greenfield airports at Mopa in Goa and at Heraklion, Crete, in Greece.
Interestingly, last year GMR had announced that the Tata Group, GIC and Hong Kong-based SSG Capital Management would co-invest ₹8,500 crore in its airports business for a 45% stake. However, the deal hit a hurdle as domestic regulations didn’t allow for a firm that operates an airline to buy an over 10% stake in an airport operator. The Tata Group owns majority stake in budget carrier AirAsia India and full-service airline Vistara.
“The partnership with Groupe ADP is in line with GMR’s business direction to become a global airport developer and operator,” said G.M. Rao, Chairman, GMR Group. “With Groupe ADP, GMR will have smoother access to global markets, opening up newer avenues of business growth.”
In 2019, Groupe ADP’s Paris-Charles de Gaulle and Paris-Orly airports handled more than 108 million passengers and 2.2 million metric tons of freight. The company’s revenue in the last calendar stood at €4,700 million and net income at €588 million.
"The acquisition of a 49% stake in GMR Airports fits within Groupe ADP's strategy. It sets a robust industrial partnership and enables Groupe ADP to build, only two years after taking control of TAV Airports, a unique worldwide network of airports with a solid industrial expertise and strong development capacities,” said Augustin de Romanet, chairman and CEO of Aéroports de Paris SA-Groupe ADP. “This acquisition will constitute a growth driver in the medium term, and also a transforming position for the group in one of Asia's and the world's most dynamic and promising countries.”