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NEWS Last modified on December 29, 2011

CAI to expand global airport portfolio?

Changi Airports International (CAI) is in talks to buy a 26% stake in the airport business of GVK Power & Infrastructure, according to newspaper reports in India.

Changi Airports International (CAI) is in talks to buy a 26% stake in the airport business of GVK Power & Infrastructure, according to newspaper reports in India.

India’s The Economic Times claims that the potential deal would allow CAI – the investment arm of Singapore Changi operator, Changi Airport Group  (CAG) – to tap into India's fast-growing air travel industry.

The newspaper claims that CAI could pay up to $415 million for the stake, quoting a source close to the deal as saying: “The deal is in the final stages, and an announcement is likely to be made in January.”

GVK owns 50.5% of Mumbai's Chhatrapati Shivaji International Airport, which it is redeveloping at a cost of about $2.3 billion, and holds a 43% stake in Bangalore's Bengaluru International Airport.

It also holds the first right of refusal to develop a planned international airport on the outskirts of Mumbai, for which bids are expected to be invited next year.

The sale of an equity stake in the business would help GVK secure a partner with deep pockets ahead of the Navi Mumbai airport bid.

"As of this date, neither the company nor its subsidiary have entered into any agreement with any party for selling equity stake in our airport vertical," GVK said in a statement to the stock exchanges. 

However, it added that the company explores various possible options with strategic business partners to sell stake in its various businesses.

Shares in India's GVK Group jumped more than 8% on speculation that CAI is set to buy a stake in its airport unit.

Only last month, Rajeev Jain, CEO of Mumbai International Airports Limited (MIAL), outlined the ambitious investment plans of GVK Holdings.

Speaking at the ‘Invest & Manage’ conference in London, he said that GVK’s airport expansion plans went beyond India’s borders, revealing that the company was weighing up its options to invest in two new greenfield airports in Indonesia – the New North Bali Airport and Yogyakarta Airport – for which the company has already been given exclusive rights.

A CAG/CAI spokesman declined to comment on the speculation.

CAI’s global airport interests include 8% of the shares in Gemina SpA, the holding company of Aeroporti di Roma (AdR) in Italy, and an equity stake in Beijing Capital International Airport in China.

It also has a 26% stake in Bengal Aerotropolis Project Ltd, which is developing a greenfield airport and township in Durgapur, West Bengal (India) and has signed a Memorandum of Understanding (MoU) to invest, develop and operate Phu Bai International Airport in Hue (Vietnam).

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