GMR Airports Infra and GMR Airports to Merge, Creating a Stronger Airport Infrastructure Entity

GMR Airports Infra and GMR Airports to Merge, Creating a Stronger Airport Infrastructure Entity

Posted on : 25 March, 2023 6:27 pm

GMR Airports Infrastructure Ltd (GIL) has declared that it will merge with GMR Airports Limited, with the aim of enhancing its partnership with Aeroports de Paris SA (Groupe ADP). The merger is still subject to regulatory approvals and is expected to be completed in the upcoming financial year. The company believes that this merger will reinforce its balance sheet and allow it to take advantage of potential growth opportunities.

In 2020, GMR Airports Infra had formed a strategic partnership with Groupe ADP, in which Groupe ADP had agreed to purchase a 49% stake in GAL. As part of the transaction, Groupe ADP had committed to equity earnouts of around 8% of GAL and cash earnouts of Rs 1,060 crore to GIL.

The proposed merger between GMR Airports Infra and GMR Airports is a significant event that is expected to create value for all stakeholders. The partnership between GMR and Groupe ADP, which combines resources and expertise, will enable the company to take advantage of fast-growing opportunities in the airport business and maintain its leadership position in the industry. GM Rao, the Chairman of GMR Group, expressed confidence that the merger will be a transformative event for the company.

GIL and Groupe ADP have agreed to settle the cash earnouts to GIL at Rs 550 crore, and GIL’s stake in GAL will increase to 55% from 51% pre-merger through equity earnouts. After the merger, GMR Group will continue to be the largest shareholder and in management control of GIL, owning 33.7% of the paid-up equity share capital. Groupe ADP will hold 32.3%, and the public will hold 34%.

GMR Infrastructure also said it will raise Euro 331-million (Rs 2,900 crore) from Groupe ADP through 10-year Foreign Currency Convertible Bonds (FCCBs).

The merger between GMR Infrastructure Limited (GIL) and Groupe ADP is seen as a positive step towards simplifying the corporate structure and strengthening the balance sheet. This move will help GIL achieve financial and operational excellence, which will give it an edge over its competitors. 

According to Kiran Kumar Grandhi, the Corporate Chairman, the company will continue to pursue selective growth opportunities while maintaining a conservative balance sheet approach.

In addition, the merger will enable an earlier and full settlement of the earnouts, which for 2 years were adversely impacted due to Covid conditions, the company said.

Groupe ADP’s subscription of FCCBs (Foreign Currency Convertible Bonds) will enable GIL to further reduce its debt by repaying corporate debt. Additionally, GIL will be able to settle most of the contingent liabilities related to GMR Power and Urban Infra Ltd (GPUIL). This move will help GIL to deleverage its balance sheet further, which will contribute to its financial strength and stability. Source