Singapore's Changi Airports to buy 26% in GVK Airports biz for Rs 2,200 crore

Discussion in 'Economy & Infrastructure' started by Zebra, Dec 27, 2011.

  1. Zebra

    Zebra Senior Member Senior Member

    Mar 18, 2011
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    MUMBAI: Singapore's Changi Airports is likely to buy a 26% stake in GVK's airports business, forming a crucial partnership just before bids are to be called for building a spanking new airport to cater to Mumbai's booming traffic.

    People close to the deal said Changi Airports International, a wholly owned subsidiary of Changi Airport Group, is likely to pay GVK Airport Holdings Private Limited Rs 2,000-2,200 crore for the 26% stake, valuing the Hyderabad-based company's airport assets at 8,000 crore. The valuation and the deal size are much bigger than GVK's current market cap of Rs 1,738.70 crore, which, in turn, is a reflection of the tough times being faced by infrastructure companies such as GVK on the bourses.

    "The deal is in the final stages and an announcement is likely to be made in January," a person familiar with the situation told ET. Sanjay Reddy, the GVK group's vice-chairman, said he would not like to comment on market speculation. A spokesperson for Changi Airport declined comment to an ET questionnaire some time ago.

    The deal is important for both companies. At one stroke, GVK will get a powerful international partner to help it stave off competition from domestic and international rivals when bids for the Navi Mumbai airport are invited some time next year. The new airport will help decongest the existing Mumbai airport. Although GVK secured a right of first refusal in 2005 when it won the bid to develop the current airport, it will have to match the bid by a rival for the new airport. Changi, with its deep pockets, may just be the right partner.

    For Changi, the GVK deal will be a gateway to airports in two of India's biggest cities, Mumbai and Bangalore. The deal will also free GVK, which has a total debt of over Rs 5,000 crore, from the need to invest in the airports business.


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