Fairfax to sell stake in Bengaluru Airport for $1.5 billion

Fairfax has invested nearly $1 billion in BIAL, making it the billionaire’s largest investment in India.

One of the two people mentioned above, requesting anonymity, said, “A premium of 40-50% is expected as air passenger traffic is set to increase, and the airport can now handle a large number of flights and passengers with ease.” able to adjust.” ,

If completed, the stake sale would be the largest exit deal by Fairfax in India.

Emails sent to the spokesperson of BIAL, which runs Fairfax and Bengaluru’s Kempegowda International Airport, did not elicit any response.

“The planned stake sale for the international airport with a valuation of $2.5-3 billion could be done in tranches. And priority will be given to long term strategic players or corporates to become the new owners. There may be some small investors, but it will be additional,” said the first person.

Fairfax holds about 54% of BIAL, while Siemens Project Ventures GmbH holds 20%, Airports Authority of India 13% and Karnataka State Industrial and Infrastructure Development Corporation 13%.

On June 29, Bengaluru airport said that it has achieved a significant milestone by crossing 250 million passengers since the launch of its operations or the airport’s inaugural day.

“The addition of new carriers coupled with the combination of introduction of new routes and increasing passenger numbers on existing routes has resulted in this remarkable achievement. While the pandemic has meant that traffic growth over the past two years has been slower than usual, BLR Airport has historically grown very rapidly, evidence of how quickly the airport has reached these milestones.” BIAL said in a release.

Fairfax has already started talks with strategic investors, the people mentioned above said.

In March 2021, Watts, president of Fairfax, said that infrastructure was being built to enable BIAL to handle more than 90 million passengers by 2034. For this expansion, a total investment of about $2.2 billion is required.

“This investment is yet to be fully done. This is yet another reason why players or corporates with deep pockets will have a better chance of being the new majority stakeholder in Bengaluru International Airport by buying a stake from Fairfax,” said the first person.

Bengaluru International Airport, India’s third busiest airport, has the exclusive right to complete the development, design, financing, construction, commissioning, maintenance, operation and management of the airport by 2038 under a concession agreement with the Central Government.

Fairfax became a controlling shareholder of the airport in 2016 by purchasing a 33% stake from GVK Power & Infrastructure for $321 million. It later bought an additional 5% from Zurich Airport. Later in 2017, GVK moved out of the airport by selling its remaining 10% to reduce debt.

In March 2018, Fairfax India Holdings purchased an additional 6% stake from Siemens Project Ventures GmbH for approximately $67 million, becoming the majority owner of the airport with a 54% stake.

With Fairfax planning to sell its stake, it is uncertain whether the company will revive the process of listing its flagship airport investment firm Anchorage Infrastructure Investment Holding Ltd on Indian stock exchanges.

Last year, Fairfax announced its intention to launch an IPO for Anchorage Infrastructure, but has yet to file a draft IPO document with the markets regulator.

As mentioned above, Fairfax’s stake sale plan could be a part of Fairfax’s larger India consolidation strategy, and could be in line with Vats’ firms’ stake sales in other Indian firms over the past year.

In December 2021, Fairfax Group’s Hamblin Watts Investment Council (HWIC) Asia Fund sold shares of IIFL Finance Limited. 180 crore through an open market transaction and subsequently exited IIFL Finance by selling its entire 7.48% stake. FIH Mauritius Investments, another unit of Fairfax, now holds a 22.3% stake in IIFL Finance.

In the December quarter of 2021, HWIC Asia Fund sold its entire 4.58% stake in IIFL Wealth Management Limited.

FIH Mauritius Investments now holds 13.61% stake in IIFL Wealth Management Limited.

On 16 September, Mint reported that Fairfax was looking to sell a majority stake in Fairchem Organics Ltd., for which Bank of America (BofA) has been appointed as advisor. Fairfax, through FIH Mauritius Investments, holds a 52.8% stake in the specialty chemicals firm.

Fairfax Financial Holdings Limited, through FIH Mauritius Investments Limited, holds a 49.72% stake in CSB Bank Limited as a promoter.

Fairfax, through FAL Corp, also holds a 45% stake in Go Digit Infoworks Services Ltd, the largest co-promoter of cricketer Virat Kohli-backed Go Digit General Insurance, whose 1,250 crore IPO plan has been delayed due to market volatility.

Fairfax is also a major shareholder of the National Stock Exchange (NSE) and Thomas Cook India.