GVK taps NIIF-ADIA for Rs. 6,500 crore to prevent Adani’s landing at MIAL.

GVK is in advanced negotiations with a combination of National Investment and Infrastructure Fund (NIIF) and Abu Dhabi Investment Authority (ADIA) for Rs. 6,500-crore funding in its flagship airport in Mumbai to counter advances by Gautam Adani to buy into it. 

The decision to court the sovereign wealth funds (SWFs) is being seen as an effort to bring in a white knight, said multiple sources aware of the negotiations, when the stake sale exercise in the Mumbai International Airport Ltd (MIAL) has escalated into a full blown legal battle between GVK and its South African partner Bidvest. 

NIIF, India’s first SWF, and ADIA, the world’s second largest SWF, are likely to infuse the funds through a combination of equity and debt, valuing MIAL at Rs 12,500-13,000 crore as apposed to Adani’s Rs 9,500 crore. The duo is likely to buy 49% at GVK’s airport holding company GVK Airport Developers that owns 50.5% of MIAL for Rs. 3,000 crore equity. 

Additionally, they are negotiating a structured debt instrument to infuse Rs. 3,500 crore. GVK will use the proceeds to buy out the two South African JV partners Bidvest and ACSA from MIAL, and also the three existing lenders ICICI, HDFC Bank and Yes Bank. The Reddy family’s entire MIAL shareholding is pledged with these banks. The holdco is believed to have Rs. 5,000-5,200 crore of debt. GVK’s promoters took the loans to finance an Australia project and the Bengaluru airport venture. 

Sources add, if GVK fails to service its debt obligations in future, NIIF-ADIA could take over the airport from them. Citi and Morgan Stanley are believed to be advisers in the deal. The Bangalore airport, once part of GVK’s portfolio, is now controlled by Prem Watsa’s Fairfax. 

Spokespersons of GVK and ADIA declined to comment. Mails sent to NIIF did not generate a response till press time on Sunday. 

MIAL is a joint venture of GVK and South African investors Bidvest and ACSA. GVK Airport Developers own 50.5% of MIAL, AAI 26%, Bidvest 13.5% and ACSA 10%. 

The GVK-led consortium has been running Mumbai airport since 2006 and is also building a second one in Navi Mumbai for about Rs 16,000 crore. 

MIAL owns 74% of the planned Navi Mumbai International Airport Ltd, while the rest is held by local nodal body City and Industrial Development Corp (Cidco). 

ET