India: GMR Infra to pay $482m to PE investors in airports row settlement

Photo: Mint

GMR Infrastructure Ltd (GIL) on Monday said it has settled an ongoing arbitration with the private equity (PE) investors in its airport business GMR Airports Ltd (GAL), a move that is expected to clear the decks for GAL’s initial public offer (IPO).

The Bengaluru-based infrastructure firm has agreed to pay Rs 3,560 crore to PE firms SBI Macquarie, Standard Chartered Private Equity, JM Financial Old Lane and others in lieu of their entire holding of compulsorily convertible preference shares in GAL. In addition, the PE investors will also acquire a 5.86% stake in the airport business valuing GAL at Rs 21,000 crore.

Mint reported on 21 August that the GMR Group is in talks with private equity fund AION Capital to raise around $500 million to buy out existing PE investors before its planned IPO toward the end of this year. While Aion did not respond to requests for comment, two people aware of the ongoing discussions said the PE fund is in the process of signing a binding agreement with GMR, the country’s largest private airport operator.

“The transaction is likely to close in the next 10 days which will also offer full exit to the investors of GAL,” the first person mentioned above said. The three PE firms had invested Rs 1,478 crore in GAL during fiscal year 2011 and 2012 through compulsorily convertible preference shares (CCPS).

As per the investment agreement, signed during FY11 and FY12, GMR was to provide an exit to the investors either through an IPO, likely later this year, or a buyback in 2015. During the same year, due to lack of exit, the investors initiated arbitration proceedings against the infrastructure company administered by the Singapore International Arbitration Centre.

The settlement brings a three-year long arbitration process to an end. “Pursuant to the settlement agreement, all parties decided to withdraw the ongoing arbitration and pursuant to binding agreements giving effect to the terms of the settlement the Investors (along with certain of their affiliates) would acquire 5.86% equity of GAL at a 100% valuation of Rs 210 billion and receive a payment of ₹35.60 billion in lieu of their entire CCPS,” or GIL said in a stock exchange filing.

The payout to PE investors will be funded by GIL through the sale of its airport-related equity holdings to the airport business. The sale will include GIL’s entire shareholding in Cebu airport and Clark EPC project for operations and maintenance in the Philippines at a valuation of $236 million and $5 million respectively. GIL will also sell its 40.1% stake in Delhi Airport Parking Services Ltd for $2 billion.

GIL’s equity holding in Cebu airport and Clark EPC stands at 40% and 5% respectively.

The acquisition will be funded by GAL through a fresh issue of non-convertible debentures worth Rs 2,005 crore. Duff and Phelps was the valuation advisor. GMR Infrastructure Ltd had a consolidated net debt of Rs 17,049 crore at the end of 31 March, according to Bloomberg. GIL closed at Rs 15.75 a share on Monday, down 1.56% from its opening of Rs 16.

Also Read:

GMR Airports in talks to raise $500m from AION Capital ahead of IPO

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.