MUMBAI:
Malaysia Airports Holdings
Berhad is evaluating a potential minority share purchase in
GVK Airports Holdings
, which runs the existing Mumbai international airport and has rights to develop a second one in the city.
Malaysia Airports is working with a top international consulting and advisory firm to explore a stake acquisition even as GVK revived share sale plans to financial and strategic investors, people directly aware of the matter said.
The Malaysian interest comes even as sovereign wealth fund
Qatar Investment Authority
and
Canadian Pension Plan
have also evinced interest to buy into the airport operator, which has appointed Citigroup for a stake sale. GVK, like its peer
GMR, has oscillated between private share placement and an IPO for the airports holding company in recent years.
Malaysia Airports will pursue a deal at the right price and discussions could run into valuation hurdles, sources added. GVK has had inconclusive talks with several investors including German airport operator AviAlliance in the past. Incidentally, Malaysia Airports is circling GVK after selling small minority investments in Hyderabad and Delhi airports, operated by GMR, as part of a management services contract previously.
When contacted, GVK declined to comment. An emailed query to Malaysia Airports remained unanswered at the time of going to press.
The debt-laden infrastructure major GVK needs capital to develop the Rs 16,000-crore second Navi Mumbai International Airport. GVK’s airports vertical, a subsidiary of the listed GVK Power & Infrastructure, reported a revenue of around Rs 3,400 crore and an operating profit of around Rs 590 crore in FY18. The airports holding company has about Rs 8,000-crore debt.
The sizeable debt in the holding company and opaqueness of airport real estate valuations have scuppered deal-making in the past. “There’s often lack of agreement on how to value attractive real estate, especially in Mumbai — whether to go by absolute development potential or the net earnings after revenue-sharing and taxes,” a banker who has advised on infrastructure deals said.
Malaysia Airports operates most of the airports in the home country and has been expanding overseas with a stake-buy in Sabiha Gocken International Airport in Turkey. It was the first Asian airport operator to get listed on the stock exchanges. Shares of GVK Power & Infrastructure, which announced financial closure for the Navi Mumbai airport project last month, ended flat at Rs 12 in Mumbai trade on Tuesday.