Big Win For Adani Group’s Airport Business As It Acquires 74% Stake in Mumbai International Airport

Adani Group announced that it is acquiring GVK's stake in Mumbai International Airport Ltd (MIAL). The group will also be acquiring the stakes of minority partners Bidvest Group and Airports Company South Africa (ACSA), thereby giving it a 74% state in MIAL (the remaining 26% being with Airports Authority of India (AAI).

As part of the acquisition, Adani Airport Holdings Limited (AAHL), the holding company of Adani Group for its airports business and a subsidiary of Adani Enterprises Limited), will enter into an agreement to acquire the debt of GVK Airport Developers Limited, the holding company through which GVK Group holds 50.5% equity stake in MIAL.

The GVK Group and Adani Airport have agreed that Adani Airport will offer a stand-still to GVK, in addition, to release of the guarantee given by GVK Power and Infrastructure Limited with respect to the debt acquired by it.

In recent years, the GVK Group has been trying to pay down its debts. The group has been facing heat from its lenders who have taken a series of measures to recover their dues from the group, including clearing a proposal made by Deutsche Bank to buy out Goindwal Sahib power loans worth Rs 3,900 crore at a discount of 70 per cent.

In May, CRISIL downgraded Mumbai International Airport’s (MIAL’s) short-term loans, project loans, and Rs 2,000 crore of proposed non-convertible debentures due to cash flow constraints. MIAL’s debt continues to be under rating watch with negative implications, the rating agency had said.

With six airports already won in an earlier AAI tender, Adani now becomes the second largest private airport operator after GMR Group, which operates Delhi and Hyderabad airports.

The acquisition also gives the Adanis ownership of the upcoming Navi Mumbai airport, in which MIAL holds 74% share.

GVK Group and Adanis have agreed that Adani will offer a stand-still to GVK, in addition, to release of the guarantee given by GVK Power and Infrastructure Limited with respect to the debt acquired by it.

"Adani Airport Holdings Limited intends to infuse funds into MIAL to ensure that MIAL receives much needed liquidity and also achieves financial closure for Navi Mumbai Airport," the company said in a statement.

In 2018, Adani Group had initiated efforts to buy the share of South African investor Bidvest in Mumbai International Airport Limited (MIAL).

In 2019, GVK announced that it had announced the decision to sell its stake in its airport holdings companies to a consortium of UAE’s sovereign fund Abu Dhabi Investment Authority (ADIA), India’s sovereign fund NIIF and Canada’s Public Sector Pension (PSP) but the transaction could not achieve closure because of litigation initiated Bidvest, which wants to exit India by selling its stake.

The consortium has served a legal notice to the GVK group and lenders saying that selling stake in Mumbai International Airport Limited (MIAL) to Adani group will be a breach of the agreement they had entered in October 2019.