GVK in talks on ~135 bn for Navi Mumbai airport project
The GVK-led consortium, which is developing the Navi Mumbai International Airport, is in talks with banks to raise around ~135 billion to fund its secondphase expansion plan. According to sources in the banking industry, the bankers are evaluating a proposal for this big-ticket infrastructure lending.
“State Bank of India is evaluating the proposal, and based on the outcome, many other public sector banks are likely to participate,” a senior banking source said. However, it could not be ascertained how many banks will be a part of this consortium. GVK could not be reached for comments.
Navi Mumbai International Airport (NMIA) announced financial closure for the construction of the first phase of the greenfield project last week.
The company said Yes Bank would be the lead bank in this phase. NMIAL is a public-private partnership venture in which GVK-led Mumbai International Airport (MIAL), which operates the airport in the city, has a 74 per cent stake. MIAL’s shareholders include GVK Industries, Airports Company South Africa and Bidvest. City and Industrial Development Corporation of Maharashtra holds the remaining 26 per cent in the project.
“They (promoters) have started approaching banks to assess the level of interest for financing the second phase of Navi Mumbai airport project. Though feasibility of the project is clear, banks are worried over the stressed financial profile of the promoter group," said another source.
According to sources, if the promoter control for the airport business is reworked, then bankers will have a lot more favourable view towards the funding aspect. "There is still time on hand. We will take a call after thorough due diligence," a senior bank executive said.
GVK Power and Infrastructure has a consolidated debt level of around ~130 billion. In FY18, the company had reported a loss of ~5.37 billion on a revenue base of ~48.37 billion. During this period, finance cost for the infrastructure firm was at ~16.43 billion.
In recent years, the Hyderabad-headquartered firm has taken several steps to pare debt for reducing its interest outgo. Apart from selling its stake in Bengaluru international airport, GVK had refinanced its high cost debts.