Adani Enterprises Subsidiary to Take Control of Mumbai, Navi Mumbai Airports

Adani Enterprises Ltd, through its subsidiary Adani Airport Holdings Limited (AAHL), has entered into an agreement to acquire the debt of GVK Airport Developers Limited (GVKADL), a subsidiary of GVK Power and Infrastructure Ltd, both companies informed stock exchanges. When this transaction is complete, the Adani group will gain control of the second busiest airport in the country in Mumbai.

GVKADL is the holding company through which the GVK group holds 50.50% equity stake in Mumbai International Airport Limited (MIAL), which, in turn, holds 74% equity stake in the greenfield Navi Mumbai International Airport Limited (NMIAL).

According to the agreement, AAHL will acquire the debt of GVKADL from its airport lenders. The GVK Group and AAHL have agreed that AAHL will also offer a stand-still to GVK to release of the guarantee given by GVK Power and Infrastructure Limited with respect to the debt acquired by it.

GVK said the agreement with Adani included the acquisition of debt by Adani from various GVK lenders, including a Goldman Sachs-led consortium and HDFC; releasing GVK of various obligations, securities and corporate guarantees given in respect of debt to be acquired by Adani; Adani converting the acquired debt to equity of GVKADL on mutually agreed terms; and the infusion of funds by Adani into MIAL to provide liquidity support.

An agreement signed in October 2019, where Abu Dhabi Investment Authority, Canada’s Public Sector Pension Investment Board, and state-backed National Investment and Infrastructure Fund sought to buy a 79.1% stake in GVK Airport Holdings for ?7,600 crore, stands terminated.

Commenting on the development, Dr. G.V.K. Reddy, Founder & Chairman, GVK said, "The aviation industry has been severely impacted by covid-19, setting it back by many years and has impacted the financials of Mumbai International Airport Limited. It was, therefore, important that we bring in a financially strong investor in the shortest possible time to improve the financial position of MIAL, as well as to help achieve financial closure of the Navi Mumbai International Airport project. It is under these circumstances that we agreed to cooperate with Adani so as to achieve these twin objectives. Further, when the transaction is consummated, which is subject to customary approvals, we would be reducing a significant portion of liabilities to our lenders, which is of utmost importance to the group."

The Adani Group will also take steps to complete the acquisition of a 23.5% equity stake from ACSA and Bidvest in MIAL, for which it has obtained the approval of the Competition Commission of India. The remaining 26% stake is held by state-run Airports Authority of India (AAI).

The acquisition of the debt of GVKADL is subject to necessary customary and regulatory approvals.

"AAHL intends to infuse funds into MIAL to ensure that MIAL receives much needed liquidity and also achieves financial closure of Navi Mumbai International Airport to be able to commence construction," Adani Enterprises said in its exchange filing.

Adani Enterprises Ltd, the Adani Group flagship, has also won the operations and development rights over a 50-year lease for the Ahmedabad, Lucknow, Mangaluru, Jaipur, Thiruvananthapuram, and Guwahati airports, the first round of privatization that was held by the Union government in February 2019. Once it takes control of these assets, AEL will be the biggest private sector airport operator in the country.

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