bengaluru airport, gvk sells stake to fairfax, gvk mumbai airport
Passengers wait at the check-in hall at Bengaluru International Airport on March 9, 2012.Reuters file

Infrastructure company GVK Ltd on Friday announced selling 33 percent of its 43 percent equity stake in the Bangalore International Airport Ltd (BIAL) to Canadian investment firm Fairfax for Rs 2,202 crore ($336 million).

"As our focus is on deleveraging the balance sheet, proceeds from this sale shall be used to reduce our debt obligations to lenders," said GVK Power & Infrastructure Ltd in a statement.

BIAL, which operates the Kempegowda International Airport at Devanahalli, 40km from Bengaluru, is a public-private consortium, in which the Union and Karnataka Governments hold 13 percent equity stake each.

Post-divestment, Bangalore Airport & Infrastructure Developers Ltd of GVK will hold 10 percent, while Siemens Project Ventures GmbH of Germany 26 percent and Fairfax 38 percent, including 5 percent of Flughafen Zurich AG of Switzerland it acquired for $49 million (Rs.320 crore) year ago.

Fairfax's Mauritius-based subsidiary Fairfax India Holdings Corporation is the largest investor in the consortium, post-disinvestment by GVK's arm.

The state-run Airport Authority of India (AAI) represents the central government and the Karnataka State Industrial Investment Development Corporation (KSIIDC) the state government.

GVK Reddy will continue as co-chairman of the consortium and his son GV Sanjya Reddy will lead the management team as the Managing Director of BIAL despite diluting their holding to 10 percent.

"We look forward to partnering with Fairfax and working with all stakeholders in developing the airport through its next stage of expansion," said GVK Reddy in the statement.

Fairfax financial holdings group is headed by Canadian investor Prem Watsa.

"We continue to remain bullish as a pioneer and long-term investor in airport assets in the country. Having qualified as the highest bidder for the Navi Mumbai airport recently, we shall continue to build iconic assets for the country," added Sanjay Reddy in the statement.

As the first PPP greenfield project, BIAL operates the country's third business airport under a 30+30 year concession agreement, with a capacity to handle about 20 million passengers per annum from one terminal.

As a leading commercial aviation operator, the GVK group also operates the Chhatrapati Shivaji international airport in Mumbai.