GMR to divest 40% stake in Istanbul international airport for Rs 1910 cr

Bangalore-based infrastructure major GMR said on Monday it had signed an agreement with Malaysian Airports Holding Berhad (MAHB)  to divest its 40 per cent equity stake in the Istanbul Sabiha Gökçen (ISG) airport and in LGM Tourism, which operates services at the former, for €225 million (Rs 1,910 crore).

Definitive agreements were signed on December 23, subsequent to the exercise of Right of First Refusal by MAHB under the existing shareholders agreement on ISG, the company stated. The transaction is subject to the customary closing conditions, including approval of the relevant government authorities and project lenders to ISG.

This is the second major divestment of foreign assets by GMR Group in a little less than nine months. In March, it had divested stake in GMR Energy (Singapore) Pte Ltd.  

The present divestment of the two assets mentioned is estimated to release around Rs 3,500 crore of capital, simultaneously reducing an estimated Rs 5,000 crore of debt, the company said.

Rothschild (India) and White Case LLP acted as financial advisors and legal counsels, respectively, to GMR.

G M Rao, group chairman, said: “We at GMR Group continue to focus on creating liquidity and enhance value by effective portfolio management under our ALAR (asset light, asset right) strategy.”

Istanbul Sabiha Gökçen International Airport is located on the Anatolian side of Istanbul. It hosts 58 carriers, covering 125 destinations. The consortium of Limak Holding, GMR Group and MAHB was selected as the preferred bidder for upgrading and maintaining the airport in July 2007.

The airport’s new terminal was completed and commissioned in October 2009, a year ahead of schedule. LGM Tourism undertakes the operation of non-aero services at the airport such as hotel, food beverages, and lounge. GMR’s equity investment at ISG is €71.6 million.

GMR to divest 40% stake in Istanbul international airport for Rs 1910 cr