GMR Infrastructure Limited today announced that a consortium of the Tata Group, an affiliate of Singapore’s sovereign wealth fund GIC and SSG Capital Management will invest Rs 8,000 crore in its airports business, GMR Airports Limited (GAL). The investment will consist of “Rs 1,000 crore equity infusion in GAL and Rs 7,000 crore towards purchase of GAL’s equity shares,” the company said in a regulatory filing, adding that the proposed investment is subject to definitive documentation, customary regulatory approvals, lender consents and other approvals.
The Tata Group has forayed into the airport business by acquiring a 20% stake in GMR Infrastructure’s airport vertical. The salt-to-software conglomerate will team up with Singapore’s sovereign wealth fund GIC and SSG Capital Management to invest ₹8,000 crore in GMR Airports, which operates the Delhi and Hyderabad airports, among others. GIC, SSG and parent GMR Infrastructure will own 15%, 10% and 54%, respectively, in the company following the deal. Last month, Adani Group stormed its way into the airports business by winning bids to operate six non-metro airports.
I think the Indian airports industry is only now coming of age. We need several more such partnerships involving such top-quality partners, and such partnerships and PE deals should not be limited to only the top 5 airports of India. We should SUSTAINABLY develop another 50 top-class airports all over India in the next 5 years, including in regions like the North East and J&K. This is a VERY DOABLE target if our Govt shows the will, and our private sector and financial sector has the long-term vision.
The sale of stake by GMR is a classic case of how an organization, ends up in a state of selling profitable business to offset the losses from not so profit making business.
The organization diversified into gas based power and road projects and unfortunately became a drag on its balance sheet.
In hindsight it is easy to judge, when the investments were made they were potential profit opportunities.
The question is how do organization do a risk analysis and take decisions that do not hit it in future? Answer to this question needs thorough insight into profile of organization, and the environment it operates