GVK Power ups Bangalore Airport stake

Mumbai: After dithering for some time, GVK Power & Infrastructure that runs the Bangalore international airport, today said it will acquire 14 percent stake from its partner Siemens at Rs 114 a share, for around Rs 620 crore.

The Bangalore International Airport (BIAL) was developed and is now run by a consortium named Bangalore Airport & Infrastructure Developers, in which GVK has 29 percent stake and the German Siemens holds a higher 40 percent through its subsidiary by Siemens Project Ventures.

The Karnataka government and the Airports Authority of India hold 13 percent each in the airport and Zurich Airports the remaining 5 percent.

Siemens decision to partly exit the airport comes after the lock-in period was over in June.

Announcing the decision, GVK chairman GV Krishna Reddy said that “this (buying 14 percent of Siemens stake) will be a key strategic development for us to further underscore our commitment to the domestic airport sector. We are confident that BIAL will continue to add value to our airport business and will meet its objective to become the hub for the Southern market.”

Bangalore Airport & Infrastructure Developers is a step-down subsidiary of the Hyderabad-based power and infrastructure major GVK, which also owns over 50 percent stake in the Mumbai airport.

A release from GVK said subject to certain terms and compliances, it has exercised its right of first refusal to acquire 53,844,000 equity shares, constituting 14 percent of the issued capital of BIAL with a face value of Rs 10 each, from Siemens Project Ventures, at Rs 114 per equity share or about Rs 620 crore.

The Rs 114-per share offer is nearly two times more than GVK had initially offered to the German company. This is a 9.5 percent premium over the 2009 valuation of the airport. The acquisition will be completed after obtaining the requisite approvals, the statement added.

Siemens could not be reached for comments.

The GVK move comes on the heels of the Singapore airport operator Changi’s reported offer to buy the Siemens stake at a higher price than what GVK had initially reported to have offered.

Despite holding a higher stake than GVK, Siemens has not been involved in the day-to-day operations of BIAL. Siemens had reportedly sounded out potential investors like Changi and the Tata Group among others to offload 14 percent of its stake in BIAL.

The shareholder agreement between GVK and Siemens envisaged a lock-in period for Siemens along with a right of first refusal, which means as and when one of the partners decides to exit, the other will have the first right to purchase the stake of the other.

GVK had bought a 29 percent stake in BIAL in 2009 by buying out the stakes of Zurich Airports and L&T for Rs 1,170 crore, or Rs 105 a share. The deal valued BIAL at Rs 4,035 crore.

Last month, Siemens had offered the shares to GVK, which had reportedly valued it only at Rs 60 a share, which is nearly half the 2009 valuation, saying the 2009 valuation was not possible today as government changed the way tariff was decided for private airports affecting their revenue from non-aeronautical activities that contribute to the larger revenue pie. But later it agreed to pay the higher price.

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