NEW DELHI: GMR Infrastructure Ltd on Thursday unveiled a strategic group restructuring involving demerger of non-airport vertical business as part of efforts to simplify the corporate holding structure.
Along with the rejig, the board of GMR Infrastructure Ltd (GIL) on Thursday also approved raising up to Rs 5,000 crore through issuance of securities.
The restructuring is a step in the right direction towards creating pure plays in different businesses of the group thereby attracting sector-specific global investors and unlocking value for the current shareholders of GIL, the company said in a statement.
The board of GIL together with other group companies — GMR Power Infra Limited (GPIL) and GPUIL — have decided on a “composite scheme of arrangement involving vertical split demerger of the non-airport business (energy, EPC, urban infrastructure, etc) of GIL into GPUIL, as a going concern”.
Along with the rejig, GPIL would be amalgamated with GMR Infrastructure Ltd (GIL) as a step preceding demerger, the statement said.
“Separate listing of both the airport and non-airport businesses will also help in simplifying the corporate holding structure. The vertical split demerger will go a long way in facilitating deeper understanding of the airport business independently as compared to other business verticals within the group,” the statement said.
Currently, GMR group operates the country’s busiest aerodrome, Indira Gandhi International Airport in New Delhi, and Hyderabad’s Rajiv Gandhi International Airport. Also, it operates Cebu airport in Philippines.
Once the scheme is implemented, the statement said GIL would emerge as the India”s only pure play-listed airports company and all existing GIL shareholders would continue to have their same shareholding in the company.
The appointed date for the scheme, being the date on which the undertakings shall vest in the respective resulting companies, has been fixed as April 1, 2021. The scheme is subject to customary approvals from stock exchanges, Sebi, NCLT, shareholders and creditors.
The scheme is to create “mirror shareholding of GIL in GPUIL with all existing shareholders of GIL becoming shareholders of GPUIL in the same proportion”. It also envisages issue of 1 additional share of Rs 5 each of GPUIL for every 10 shares in GIL of Re 1 each as on the record date.
According to the statement, GMR has significantly grown and diversified into multiples segments within the broader infrastructure space, necessiating the need to separate airport business.
“At an initial stage of growth journey, a combined housing of various segments was required to incubate, seed, ramp-up and grow them… Each of these multiple business segments have distinct business models, operating nuances, capital commitments, risk & return profile, etc.
“These businesses have grown disproportionately over a period of time and are now at varied stages of their evolution from an overall Industry perspective. As these businesses mature and chase next phase of their growth, it would be strategically apt to segregate them,” it said.
GIL Managing Director and Chief Executive Officer Grandhi Kiran Kumar said the company has been closely evaluating various options and as a step in that direction, post the separation of non-airport business, it would be India”s only pure play listed airports company and continue its growth journey.
“We at GMR Group are committed and will continue to evaluate various strategic options to unlock shareholder value,” he said.
On Thursday, GIL board also cleared raising up to Rs 5,000 crore in one or more tranches through issuance of securities. The enabling resolution for raising funds would be subject to shareholders’ approval.
GMR group’s airport portfolio includes airports at Delhi, Hyderabad and Mactan Cebu in Philippines. The latter is being operated in partnership with Philippines-based Megawide.
Besides, greenfield projects under development include an airport at Mopa in Goa and an airport at Heraklion, Crete, Greece in partnership with GEK Terna. The GMR-Megawide consortium has won the Clark International Airport’s EPC project, the second project in Philippines.
Recently, the group signed a concession agreement for the development and operation of a greenfield airport at Bhogapuram in Andhra Pradesh. It has also inked a concession agreement to commission, operationalise and maintain the civilian enclave at the Bidar Airport in North Karnataka.
Its energy business has a diversified portfolio of around 4,995 MW generation capacity. Out of the total, 3,040 MW of coal, gas and renewable power plants are operational, and around 1,955 MW of power projects are under various stages of construction and development.
The group also has coal mines in Indonesia.