The tussle between Adani Group and GVK Group over control of Mumbai airport seems to be heading towards a resolution with the former proposing to acquire a majority stake in Mumbai International Airport (MIAL).
According to sources close to the development, Adani Group could acquire a controlling 51 per cent stake in the airport. Preliminary discussions have taken place between the two sides to end the dispute which may lead to GVK exiting the prestigious Mumbai airport venture, sources said.
GVK Airport Holdings owns 50.5 per cent in MIAL. Airport Company South Africa (ACSA) owns 10 per cent and another South African company, Bidvest, owns 13.5 per cent.
Adani Group had earlier offered to buy the stake held by the two South African companies. It may put the offer back on the table if the deal with GVK is finalised, source said.
The balance 26 per cent stake is held by the Airports Authority of India (AAI). A source close to AAI said talks of Adani taking over MIAL have been gaining ground although there no formal proposal has been made to the Authority, yet.
Neither Adani Group nor and GVK Group would comment on queries sent by BusinessLine.
Airport infra plan
Adani has been eyeing control of MIAL as part of its overall airport infrastructure plan. The group recently won a politically controversial bid to run the 88-year-old International Airport at Thiruvanathapuram. It also has the mandate to operate Jaipur and Guwahati airports. The Ahmedabad-based group won the right to upgrade and operate the airports of Lucknow, Mangaluru and Ahmedabad. If the deal with GVK goes through, it will catapult Adani to becoming India’s biggest airport operator.
Mumbai airport, being one of the busiest and most lucrative in the country, has been on Adani’s radar for over a year. In March 2019, Adani offered to buy out Bidvest’s 13.5 per cent stake for ₹1,248 crore. This was blocked by GVK claiming the ‘first right of refusal’ and Bidvest offered the same price. This would have raised the shareholding of the GVK Group from 50.5 per cent to 64 per cent. Adani then moved the Bombay High Court against GVK’s offer following which the court asked GVK to close the deal with Bidvest by November.
In October, the debt-laden GVK Group entered into an agreement to sell 79 per cent of its stake in GVK Airport Holdings for ₹7,614 crore to the Abu Dhabi Investment Authority, PSP Investments of Canada, and the state-owned National Investment and Infrastructure Fund. Proceeds from this transaction were to be used by GVK to primarily retire debt obligations of its holding companies and fund the purchase of additional shares in MIAL
However, GVK failed to make the payment to Bidvest in time. Bidvest then approached the court seeking permission to sell its stake to another entity. Simultaneously, ACSA also expressed its willingness to sell its stake in MIAL. But an arbitration tribunal put a stay on any stake sale by ACSA and Bidvest earlier this year.
In July, almost out of the blue, the Central Bureau of Investigation charged the GVK Group with siphoning off funds totalling ₹705 crore. The primary charge is of causing a loss of ₹310 crore to the Exchequer by entering into fake work contracts on the land given by the government to MIAL.
(With inputs from P Manoj)