GVK receives more than Rs 7,600 crore from its investors, plans to cut off the company’s debts.

The GVK Group has announced that it has raised more than Rs 7,600 crore from its stakeholders’ and the proceeds will be used for debt reduction and acquisition of 23.5% stake in the Mumbai International Airport (MIAL). This should prevent the bid of the Adani Group to acquire a stake in the company which operates Mumbai airport.

According to the company’s report, “GVK Power & Infrastructure’s subsidiaries, GVK Airport Developers (GVKADL) and GVK Airport Holdings (GVKAHL) have entered into definitive agreements with the Abu Dhabi Investment Authority (ADIA) subsidiaries, the Public Sector Pension Investment Board (PSP Investments) supported by its global airport platform, AviAlliance, and the National Investment & Infrastructure Fund (NIIF).” They will make a total investment in GVKAHL of Rs 7,614 crore.

GVK Airport Holdings will have four shareholders after completion of the transaction – GVK Airport Developers, the ADIA, the PSP Investments and NIIF. Also, the GVK group will hold 20.9% of GVKAHL. At Rs 9,608 crore, the deal values the assets at GVK Airport, including the Mumbai airport and the upcoming airport at Navi Mumbai.

GVKAHLis a company operating the Mumbai airport, which has won a bid to develop Navi Mumbai International Airport (NMIA) through MIAL’s 74% subsidiary Navi Mumbai International Airport (Private) (NMIAL).

“GVK will use the proceeds from this transaction mainly to significantly withdraw debt obligations of its holding companies and to finance the acquisition of additional shares of MIAL by GVKAHL from Bidvest and ACSA, in line with the right of the first offer already exercised by GVKAHL,” the release added.

“Before the end of October, as told by the arbitration tribunal, the payment to Bidvest shall be deposited in an escrow account,” said a company’s spokesperson.

Offers from the Adani Group were made to Bidvest and ACSA, which together own around 23.5% in MIAL and were looking to leave the firm. The GVK group holds 50.5% of MIAL and the remaining is owned by the Indian Airports Authority. With the acquisition of 13.5% of the Bidvest and 10% of the ACSA, GVK will achieve 74% of its stake.

Last year, the Adani Group entered the airport market, successfully bidding to take over the running of six airfields.

At the beginning of this year, Bidvest had offered the ROFR (GVK’s right of first refusal) provision to participate in MIAL. GVK had used the option and said that the stake would be purchased by them. Bidvest had, however, referred the high court of Delhi to the arbitration tribunal after delays in payment from the GVK which gave GVK the right to make payment until the end of October.

The company stated that after the deal, the airport management and branding would remain with the GVK Group. “GVK Reddy continues as executive chairman and GV Sanjay Reddy as managing director in both MIAL and NMIAL. Both airports will remain as a GVK Airports brand,” it stated.

The firm says that it will concentrate on Navi Mumbai Airport construction as the funds are in place. “We will now speed up our efforts to develop the International Airport of Navi Mumbai, monetize MIAL property assets and establish an even stronger airport business,” Chairman GVK Reddy quoted at the release.