Wed. Feb 1st, 2023
SEBI Approves Adani’s ₹10,100 cr open offer for Ambuja Cements, ACC

Adani group has their eyes to become the largest private operator of airports of the country. This will see them second to none but only the state-led Airports Authority of India under whose supervision most of the airports of India work. Adani Enterprises Ltd.   (AEL), has already gone forward to acquire stakes in six airports of the country. As sources suggest, they might have the seventh airport of the country in their hands as they are set to buy a 50.5 percent stake in the Mumbai International Airport Ltd. (MIAL).

The billionaire Gautam Adani guided company not only is set to acquire the 50.5 percent stake of the GVK group of MIAL but also plans to add in 23.5 percent stakes of the minority partners of the GVK group under their domain. The minority partners of the GVK Group are constituted of companies like Airports Company South Africa (ACSA) and the Bidvest group. ACSA holds a 10 percent stake of MIAL while Bidvest holds a 13.5 percent stake. Acquiring their portion of the airport will bring in the majority slice of the airport under the wings of Adani Group. The other 26 percent is owned by the Airport Authority of India.

Previously, the Union Cabinet had agreed to pass on six of India’s airports to the Adani group on 50-year leases. The airports are Ahmedabad, Trivandrum, Lucknow, Mangaluru, Guwahati, Jaipur. During an AAI bidding process that had ended in December 2019, Adani Group came out as the highest bidder, offering to share the highest revenue per passenger, and won the contracts. Thereafter, the group was handed with the responsibility of the operational, development, and maintenance of the leased out airports in a “public-private partnership” model.

The company website adanienterprises.com boasts of their capability of acquiring the airports that were up for privatization. The website says, “The Adani Group has forayed into the civil aviation sector by strategically acquiring Airport Development & Maintenance mandates throughout the country. This move is bolstered by the Group’s desire to upgrade the existing airport infrastructure in India to best-in-class standards, thus offering customers the most definitive airport experience. Having bid for various Airports Authority of India (AAI) airports, AEL has emerged as the highest bidder for all six of them that had been put up for privatization.” The company’s FY20 reports also gave a glimpse of the company being the top airport developer of India. They would manage to achieve that by breaking the duopoly of GVK and GMR group in the industry. The aims of the company regarding the evolution of the airports are to develop world-class infrastructure at airports, both at airside and landside, enhance the passenger experience, create entertainment destinations (aerotropolis, airport village, hotels, and malls), increase domestic airline connectivity to new and under-served destinations, and also to increase flights to long-haul destinations in the West and also to South-East Asia.

However, the COVID-19 pandemic situation saw the world’s aviation sector struggle. The global airlines body International Air Transport Association (IATA) had made their reports public in July, where they said that the passenger demand of domestic airlines will get plunged by 49 percent due to the pandemic. The group, AEL met with extra hurdles as the state government of Kerala had opposed the Union Government’s decision of privatization of the Thiruvananthapuram airport.

The Kerala government also had moved to court to stay the union’s decision of privatization of the airport. Kerala State Industrial Development Corporation (KSIDC), owned by the Kerala Government had also participated in the open bidding for the development of the airport but had lost to Adani Group, whose bid was highest. The Kerala Assembly took a unanimous decision on Monday to urge the center not to lease out the airport to the Adani Enterprises. Kerala’s CM has also commented on the matter by saying that the center should reconsider the decision and let them run the airport as a special purpose vehicle in which the state government has majority stakes.

In March 2019, Adani Group had shown their interest to run the Mumbai airport when they offered South African company Bidvest ₹1, 248 crores for a 13.5 percent stake of the Mumbai Airport. Then, the offer was blocked by GVK as they exercised their right of first refusal.

Later, in October of last year GVK was linked with three companies, Abu Dhabi Investment Authority, Canada’s Public Sector Pension Investments, and state-owned National Investment and Infrastructure Fund, as they were looking to sell 79 percent stake of GVK Airport Holdings for ₹7, 614 crores. This would be done to reduce the debt obligations of their holding companies and to stop the takeover of MIAL by Adani Enterprises.

Ben Zandi CEO – Airports , Adani Enterprise Ltd. || Image from https://www.adani.com/About-us/One-Vision-One-Team/Ben-Zandi
Ben Zandi CEO – Airports , Adani Enterprise Ltd. || Image from https://www.adani.com/About-us/One-Vision-One-Team/Ben-Zandi

Last week, the Central Bureau of Investigation had accused the GVK group that they had transferred off funds worth ₹705 crores which caused a loss of ₹310 crores. They were alleged to have done this by entering into fake work contracts on land given by the government to MIAL.

According to reports, Adani Group would pay 15,000 crores for the total transaction. Shares of Adani Group rose by 9 percent on Monday after the news of the acquisition of the airport came out.

The takeover puts a huge question mark about the future of the Navi Mumbai airport project. MIAL holds 75 percent part in it. GVK is in process of negotiating a financial closure with the State Bank of India for building the ₹17, 000 crore airport.

Property consultant Knight Frank India had previously estimated in February that the country’s airport retail market would fluff up to $ 9.3 billion by 2030, as reported by Livemint. In 2019, the

retail market was found to be just $1.4 billion. Also, the report claims that by 2030 the estate opportunity for airport operators will be $ 1.6 billion. Ben Zandi was appointed as CEO of the Airports division under Adani Enterprise Ltd. in January who previously acted as CEO of German airport operator Fraport. With him at the top, AEL targets to maximize revenue from non-aeronautical streams as he comes with tonnes of experience, working in the hospitality and non-aeronautical services for decades.

 

By Swastik Bhattacharjee

A student from Kolkata. Currently content creator at The Indian Wire.

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