Aéroports de Paris (ADP) and GMR Airports Infrastructure Ltd. agreed to fold their joint-venture company into GMR, giving ADP a liquid stake in a business that owns airfields in India. ADP owns 49% and GMR Airports own 51% stake in the unlisted GMR Airports Ltd.
Combining GMR Airports Infrastructure and GMR Airports will simplify the capital structure of the unlisted company, allowing the combined entity to more easily capture new business, the companies said.
The merger will take place in the first half of 2024, the companies said in a statement. ADP would hold a 45.7% stake in the combined GMR Airports Infrastructure and GMR Airports.
“Demand for air travel has picked up substantially, which will speed up airport privatization initiatives of the respective governments across the world,” GMR said in a separate statement.
The merged company, with an improved balance sheet, will be in a much stronger position to further scale up the airport business by judiciously participating in profitable opportunities mainly in India, South Asia, Southeast Asia and Middle East. GMR’s portfolio includes airports in Delhi and Hyderabad.
Augustin de Romanet, Chairman and CEO, Groupe ADP said: “Three years after our acquisition of a stake in the Indian group GMR Airports, a new step in our presence in Asia commences today. The operation launched today will reveal the value of our stake through an airport company listed on the Indian Stock Exchanges. This operation will enable us to fully seize the development opportunities of the Indian airport market in the coming years. With TAV Airports, a group listed in Turkey, and GMR Airports, to become listed in India by mid-2024, Groupe ADP, itself listed in Paris, will hold a unique position in the airport industry. It is thus initiating an original model for financing its development. As a multi-local global player, Groupe ADP pursues its ambition to create value for all stakeholders and puts decarbonization of its operations as a common objective for all its airport platforms."
ADP will invest $353 million in foreign currency convertible bonds issued by GMR Airports Infrastructure, with the proceeds used by the Indian company to clear its balance sheet by repaying corporate debt and also settling a major part of its liabilities. The investment will lead to a cash expense of the same amount in the coming weeks, ADP said.
The deal is in line with ADP’s strategy of selective international growth and confirmed its objective for net financial debt to be 3.5 to 4.5 times earnings before interest, tax, depreciation and amortization in 2025. It also confirmed its dividend policy of a 60% payout ratio on earnings for 2023-2025, with a minimum of €3 a share.