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Three PE Funds set to invest 1,440 crore in GMR Airport

Manisha Singhal & Sobia Khan, Mumbai/Bangalore The Economic Times

March 10, 2011

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Three private equity funds will invest close to 1,500 crore in an unlisted company of GMR Group, which runs the Delhi and Hyderabad airports. Two of the funds are SBIMacquarie, a joint venture between India’s largest bank and the Australian investment bank, and the PE arm of Standard Chartered PLC, said people familiar with the transaction. The third is the PE arm of a south Indian bank, they said, declining to identify it. They spoke on condition of anonymity because the transaction was at a sensitive stage.

SBI-Macquarie Fund will invest 900 crore in GMR Airport Holdings, a fully owned subsidiary of GMR Infrastructure, the Hyderabad-based group’s holding company. The Foreign Investment Promotion Board (FIPB), at a meeting on February 11, approved GMR’s proposal to raise money from SBI-Macquarie and the other funds, said a senior FIPB official. He declined to be named because the decisions taken in the meeting had not yet been made public. FIPB is an arm of the finance ministry that approves foreign investment.

In all, the three funds will invest Rs 1,440 crore. A Subba Rao, chief financial officer of GMR Group, declined to confirm or deny the fund-raising. He, however, said any funds the airport arm may raise will not be used for its existing portfolio, but may be for acquisitions or new projects.

"We do not have any immediate requirement for funds and the plan is to use it (new funds) for future capex. If we have the funds, opportunity will follow us," said Rao. SBI-Macquarie and Standard Chartered PE declined comment.

The private equity players will invest through compulsorily convertible preference shares that can be converted into equity at a later date, said investment banking officials. Analysts tracking the company said GMR Group might use the funds for retiring debt taken for the Delhi airport, and for development of real estate.

According to information provided by the company, its net debt is Rs 15,300 crore and interest costs on account of the Delhi airport alone stand at Rs 90 crore. Detailed financial numbers for GMR Airports were not immediately available because the company is unlisted.

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