GVK Power and Infrastructure ltd will sell 33 per cent of its stake in Bangalore International Airport ltd to Fairfax India for Rs 2,149 crore, a deal that will trim the group’s debt burden by more than Rs 2,000 crore.
The transaction, expected to be completed by mid-2016, would also help the diversified entity save around Rs 300 crore annually on interest costs.
Bangalore International Airport ltd (BIAl) owns and operates the Kempegowda International Airport Bengaluru. The airport started operations in May 2008.
In BIAl, GVK Group holds 43 per cent stake, Siemens Project Ventures GmbH 26 per cent and Flughafen Zurich AG ltd 5 per cent while state-owned entities Airport Authority of India and Karnataka State Industrial Investment & Development Corporation limited hold 13 per cent each.
GVK Power & Infrastructure on Monday said it would divest 33 per cent stake in BIAl to Fairfax India Holdings Corp through their wholly-owned subsidiaries in Mauritius for an aggregate investment of Rs 2,149 crore.
“Upon completion of this transaction, there would be reduction of debt burden of around Rs 2,000 crore and would also result in savings of interest costs to the extent of Rs 300 crore per annum,” the company said in a release.
Grappling with substantial debt burden, GVK Power has been exploring avenues, including possible IPO of its airport business, to raise funds.
GVK Airport Developers, a wholly-owned subsidiary of GVK Power, had initiated a financing process last year to reduce its debt obligations.
According to GVK’s Founder Chairman and Managing Director GVK Reddy, the deal is an important and successful milestone in deleveraging the balance sheet.
“All proceeds from this stake sale shall be used to bring down our debt obligations to our lenders.