France’s Groupe ADP to buy 49% stake in GMR Airports for Rs 10,780 crore

MUMBAI: The GMR group on Thursday struck a deal to sell a large minority stake in its airports business to France’s Groupe ADP and said it has called off a similar agreement signed last year with a Tata-led consortium.

In a late night development, GMR will sell 49% to Groupe ADP, which runs three airports in Paris for Rs 10,780 crore. A group spokesperson said it got a better valuation from the French company and that a deal with a global airport operator would offer better synergies. The combined entity, Groupe ADP plus GMR, would be the biggest airport operator in the world in terms of passengers handled, GMR claimed in a statement. The spokesperson added that GMR parted ways with the Tata group “amicably”.

ADP will first buy 24.99% in GMR Airports and step it up later with another purchase of 24.01%, an ADP statement said. GMR Infra will be left with 51% of the airport business.

GMR group will raise Rs 9,780 crore via a secondary sale of shares while ADP will infuse an additional Rs 1,000 crore worth of equity.

“The first tranche of Rs 5,248 crore will be received by GMR group immediately. This money will help deleverage the group further and result in improved cash flows and profitability,” GMR said in a statement.

“Groupe ADP will be granted extended rights including the presence of board members at GMR Airports’ board equal to that of GMR Infrastructure Limited board members. Groupe ADP will also have the right to appoint predetermined key executives within GMR Airports,” the French entity said in a release.

Last year, GMR had signed an agreement with a consortium led by Tata-owned TRIL Urban Transport, and comprising an affiliate of Singapore wealth fund, GIC and Hong Kong’s SSG Capital Management to sell 44.44% for Rs 8,500 crore. But the move hit a hurdle on a rule that mandated that an entity owning a stake in an Indian airline can’t own more than 10% in a local airport.

Tata Sons owns close to half of two Indian carriers Vistara and AirAsia and the earlier proposed 20% stake in GMR’s airports business would give it 12.8% in Delhi Airport. The deal never got final approval from the government.

The new deal values GMR’s airports business at Rs 22,000 crore, 22% higher than it was valued at by the Tata group consortium. Also, as per 2019 passenger statistics, the combined passengers handled by GMR Airports and Groupe ADP stood at 336.5 million, the highest across the world.

GMR runs India’s busiest airport in Delhi and the fourth busiest in Hyderabad. It is building a new airport in Goa and has won the contract to manage the airport at Nagpur. It operates the Mactan-Cebu International Airport in the Philippines and is building a new airport in Crete island, Greece. Groupe ADP operates three airports in Paris-Charles de Gaulle, Orly and Le Bourget. It operates 26 international airports, owns 46,1% of TAV Airports Holding, and 8% of the Schiphol Group.