Adani Enterprises Ltd. is seeking a controlling stake in Mumbai's international airport as billionaire Gautam Adani continues his aggressive push into what was until recently the world's fastest-growing aviation market.
Adani Airport Holdings Ltd. will acquire the debt of GVK Airport Developers Ltd., the holding company of GVK Power & Infrastructure Ltd., according to an exchange filing Monday. Adani will also buy the 23.5% stake held in Mumbai International Airport Ltd. by Airports Co. South Africa and Bidvest Group Ltd., and then work to acquire control.
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It's a high-stakes bet on an industry that's been brought to its knees by the coronavirus pandemic. The outbreak in India is only gathering pace, sickening more than 78,700 people on Sunday alone, a one-day record. And while budget carriers mushroomed across the South Asian nation as people took to the skies for the first time, poorer economies with rickety infrastructure and a reliance on natural resources have been hit much harder by Covid-19, casting doubt on the ability of consumer-led sectors to quickly bounce back.
Still, Adani has been eyeing a slice of Mumbai airport for a long time, even getting involved in lawsuits in its attempts to buy out minority shareholders. Its latest move will catapult the coal-to-ports conglomerate into the major league, pitting it against GMR Infrastructure Ltd., which controls the international airport in New Delhi, India's busiest.
"The aviation industry has been severely impacted by Covid-19, setting it back by many years and has impacted the financials of Mumbai International Airport," GVK Chairman GVK Reddy said in a statement. "It was therefore important that we bring in a financially strong investor in the shortest possible time."
Prime Minister Narendra Modi has been seeking private funds to repair and grow the nation's creaking infrastructure, including its airports. Adani recently won other bids to operate six smaller airline hubs in the country. GVK holds a 50.5% interest in Mumbai international airport.
GMR is also selling a 49% stake in its airports business to a consortium led by India's Tata Group, a unit of Singapore's sovereign wealth fund GIC Pte and SSG Capital Management.
GVK, meanwhile, has been beset by troubles of late, with a government agency probing alleged money laundering of over seven billion rupees ($95 million) by Reddy and his son G.V. Sanjay Reddy from funds meant for Mumbai International Airport. The nation's Central Bureau of Investigation has also registered a case against GVK Airport Holdings Ltd. and others alleging fraud, cheating, forgery and criminal conduct.
GVK will separately terminate a $1.1 billion investment agreement with Abu Dhabi Investment Authority, the Public Sector Pension Investment Board and National Investment & Infrastructure Fund, it said in another filing.