GVK Power & Infrastructure Ltd plans to raise up to ₹8,000 crore by divesting a stake in its airports business and other verticals. Also in the offing are an IPO and the merger of its airports arm with Bangalore International Airport Development Ltd (BIAL).
The company management headed by GVK Reddy will seek shareholders nod for enabling resolutions which will permit it to merge the airports business, raise funds through divestment and also come out with an IPO.
The diversified infrastructure company had divested its stake in the Bangalore International Airport Limited to Prem Watsa headed Fairfax group, in 2017, to utilise the proceeds to repay its debt of GVK Airport Developers Limited, a subsidiary of the company.
Now the company has initiated a process with Ministry of Corporate Affairs to merge GVKADL with BIADL through a scheme of amalgamation. While both these companies have secured various approvals, necessary applications have been filed with the Registrar of Companies and the Official Liquidator, Hyderabad.
Towards expansion plans, GVK will seek nod to raise up to ₹6,000 crore by dilution of stake in GVK Airport Holdings Limited, a stepdown subsidiary.
The GVKADL holds 50.5 per cent stake in Mumbai International Airport Private Limited. With MIAL being awarded the greenfield Navi Mumbai Airport Limited, the company expects both these projects to result in good valuations and thereby enable in fund raising.
GVK is also considering fund raising through dilution of equity stake in its other subsidiaries and step down subsidiaries in airport, energy and transportation verticals.
IPO
The company proposes its stake dilution in GVKAHL through either IPO, which may include sale of shares of the company, private placement or sale to one or more investors or a combination of different options.
The company is proposing to move a special resolution at the ensuing Annual General Meeting after the Audit Committee approved and recommended the move, in the interest of the company, the GVK management has sought to communicate with its shareholders.
In addition to these measures, the GVK management is also proposing dilution of stake to raise up to ₹2000 crore through its other subsidiaries which may be through an initial public offer, private placement of shares or sale of stake to one or more investors.
Over the past few quarters, the GVK management has stepped up its efforts to divest stake in some of the completed projects and managed to do so with the Bangalore airport. Now with the proposed investment of about ₹16,000 crore for the Navi Mumbai Airport, it is in the process of raising funds through various resources.
The company, whose power plants both gas based and coal fired are faced with fuel shortage, expects the situation to turn around with gas supplies later this year.
Over the past 12 quarters, the company performance was impacted due to inadequate supplies of gas and coal to its power plants, forcing it to divest BIAL to pare the company's overall debt.