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Event: GMR Infrastructure (GMR) has received a USD 200 mn (INR 8.9 bn) PE
infusion in its subsidiary GMR Airports Holding, the holding company for its airports
business. The investment has been made by Macquarie SBI Infrastructure
Investments via subscription to compulsorily convertible preference shares of the
company.
Deal specifics: The deal includes the existing four airports in GMR’s portfolio—Delhi
International Airport, Hyderabad Airport, Sabiha Gokcen Airport (Turkey), and the
Male Airport. While Delhi, Hyderabad and Turkey airports are already operational, the
company had achieved financial closure of the Male Airport in Q3FY11. The deal
structure is similar to that of GMR Energy, which had raised funds from Temasek,
IDFC PE, Argonaut Ventures, and UTI Ventures.
Expected development: News articles had mentioned the possibility of such a deal
some time ago. It was being speculated that the company will raise close to INR 15
bn from three private equity funds with INR 9 bn from SBI-Macquarie. It was also
speculated that the investment is a structured product with an assured yield with the
holding of investors capped at 39.05%.
Our SOTP value: Since there is limited clarity on the structure of the private equity
deal, we retain our SOTP value at INR 61/share.
Outlook and valuations: The fund raising exercise is expected to improve GMR’s
growth prospects as it will help the company explore future opportunities outside
India, particularly since there is limited scope for private sector participation in the
airports space in India. We like the management’s focus on improving profitability by
deleveraging balance sheet and believe that operating leverage is likely to kick in,
which could aid earnings growth and, hence, valuations. We maintain ‘BUY/Sector
Outperformer’ recommendation/rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Event: GMR Infrastructure (GMR) has received a USD 200 mn (INR 8.9 bn) PE
infusion in its subsidiary GMR Airports Holding, the holding company for its airports
business. The investment has been made by Macquarie SBI Infrastructure
Investments via subscription to compulsorily convertible preference shares of the
company.
Deal specifics: The deal includes the existing four airports in GMR’s portfolio—Delhi
International Airport, Hyderabad Airport, Sabiha Gokcen Airport (Turkey), and the
Male Airport. While Delhi, Hyderabad and Turkey airports are already operational, the
company had achieved financial closure of the Male Airport in Q3FY11. The deal
structure is similar to that of GMR Energy, which had raised funds from Temasek,
IDFC PE, Argonaut Ventures, and UTI Ventures.
Expected development: News articles had mentioned the possibility of such a deal
some time ago. It was being speculated that the company will raise close to INR 15
bn from three private equity funds with INR 9 bn from SBI-Macquarie. It was also
speculated that the investment is a structured product with an assured yield with the
holding of investors capped at 39.05%.
Our SOTP value: Since there is limited clarity on the structure of the private equity
deal, we retain our SOTP value at INR 61/share.
Outlook and valuations: The fund raising exercise is expected to improve GMR’s
growth prospects as it will help the company explore future opportunities outside
India, particularly since there is limited scope for private sector participation in the
airports space in India. We like the management’s focus on improving profitability by
deleveraging balance sheet and believe that operating leverage is likely to kick in,
which could aid earnings growth and, hence, valuations. We maintain ‘BUY/Sector
Outperformer’ recommendation/rating on the stock.
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