Tata Group, GIC and SSG to buy 44% in GMR Airports
Publish on : 2019-04-06 11:55:39
MUMBAI: GMR Infrastructure said a consortium comprising the Tata Group, an affiliate of Singapore sovereign wealth fund GIC and Hong Kong-based SSG Capital Management would invest Rs 8,000 crore ($1.16 billion) in its airports unit.
GMR will use the entire fund to bring down its debt to Rs 12,000 crore from Rs 20,000 crore and move ahead to demerge the division into an “airport pure play”, or a standalone airport business, the company’s management told reporters on Wednesday.
The selloff will give Tatas a stake of about 20% in the airport holding company, while GIC and SSG will hold about 15% and 10%, respectively. GMR Infra’s stake will come down to about 54% while an employee welfare trust will hold about 2%.
The consortium has valued GMR Airports at Rs 18,000 crore. This, added to 'earn-outs' of up to Rs 4,475 crore over the next five years, will take the total value to Rs 22,475 crore after the stake sale is consummated.
Achieving of the earn-outs will increase GMR’s stake from 54% to about 62%, after the current PE investors SBI Macquarie, Standard Chartered Private Equity and JM Financial Old Lane exit, releasing their current stake of 5.8% in the group. It is also likely to alter the consortium's stake by a minor margin.
Earn-outs are in the nature of estimated earnings based on certain performance milestones agreed upon between the management and investors. These milestones include performance of its duty free business, commercial real estate, etc., that the company can achieve over the next 5 years.
Source :- Economic Times