GMR Infrastructure on Wednesday announced that Tata Group along with two other foreign entities has agreed to invest INR 8,000 Crore in GMR Airports Ltd. The other two entities involved in the deal include Singapore’s sovereign wealth fund GIC Pte Ltd and Hong Kong-based SSG Capital Management.
“The investment amount of INR 8,000 Crore will consist of INR 1,000 Crore equity infusion in GAL and INR 7,000 Crore towards the purchase of GAL’s equity shares from GIL and its subsidiaries,” the company said in its regulatory filing. After the purchase, Tata will hold 20 per cent in the airport unit, while GIC will get 15 per cent and SSG will own 10 per cent. GMR Infrastructure and its units will hold about 54 per cent stake in the airports business, while the company’s Employee Welfare Trust will own 2 per cent.
This move is seen as a strategic entry point for the Tata Group into the airport infrastructure business that has experienced growing interest from the major investment firms. However, it could also be termed as a symbiotic move for the debt-laden GMR Group. While the airport business brings in 60 per cent of total revenue for GMR, the company has a net debt of around INR 20,000 Crore, out of which INR 6,800 Crore is from the airport business.
Following the investment, GMR Infrastructure proposes to separate its energy, highways, urban infrastructure and transportation businesses, leading to the separation of its airport business, subject to customary consents, regulatory and corporate approvals, the company said. GMR Infrastructure’s airports business contributed INR 5,433 Crore to the company, accounting for the highest chunk of operating revenue of INR 8,721 Crore in FY18 among its various business verticals, including power and roads projects.