GVK Power eyes L&T's stake in BIAL

L&T has put its 17% stake in the Bangalore International Airport Ltd (BIAL) on the block. GVK was one of the front runners and has a significant interest in picking up the stake. The right of first refusal (RoFR) expires today. 

In an interview with CNBC-TV18, GVK Reddy, Chairman, GVK Power & Infrastructure spoke about the company’s interest in the stake and the fund raising plans. 

Here is a verbatim transcript of the exclusive interview with GVK Reddy on CNBC-TV18. Also watch the accompanying video. 

Q: What is the status on the BIAL stake and what have they communicated to you at the moment? 

A: L&T have offered also to other shareholders and the Zurich Airport has already offered them that they are going to buy out that stake. And that time will get over tonight midnight. Then it will be time to see what happens tomorrow. We are definitely interested in acquiring more shares; there is no doubt about it. 

Q: But with the Zurich Airport expressing interest to pick up the 17% stake? 

A: We have already given the letter to them to pick up, so that we will have an understating to see that ultimately we pick up that stake. 

Q: How do you plan to operate the Zurich Airport going forward and the Bangalore International Airport? 

A: Once we get atleast a controlling interest in the sense atleast 29% and all, then we will get into the management for the development of the airport to get in. 

Q: Tomorrow after the RoFR expires, Zurich Airport would be picking that stake. So where does that leave GVK Power and your plans for BIAL? 

A: What you said is right; but once tomorrow it will be over it is a matter of discussion with Zurich Airport and L&T and others and try to see and come with an understanding. We have to discuss. 

Q: What does this indicate, Zurich Airport had sometime back offloaded its 12% stake and you picked it up, why is Zurich Airport going ahead and trying to pick up this 17% stake now, what does it indicate? 

A: I can’t answer that question. There is no doubt they have been offloaded about 12% and 5% that they have, and also L&T they have given the first right of refusal of 17%. And somebody has to give or take otherwise they can give it to anybody. That is why they have given that, and later we will discuss with Zurich Airport and L&T and try and pick up their stake. But still nothing has been finalised. 

Q: What are your longer term plans; does that include maybe picking up a 17% stake from Zurich Airport at some point in time? 

A: We definitely want to pick up 17% and also once we get in, then maybe you will see Siemens has 40% and they can only offer 14% after one and a half years and 26% after 5.5 years, but once you have this for 12% and more when they offer we will also have the first right of refusal. They can’t sell it to others. 

And the government doesn’t buy it, the state government and the ministry that is airport authority etc they have 26%, they are not interested because it’s a public private partnership. So we will have the opportunity to pick up that stake at an appropriate time. 

Q: For the 17% L&T stake how are you managing the Rs 600 crore funds required to pick it up at whatever point of time that you plan to pick it up from Zurich Airport? 

A: Money is not a problem. We are going to raise the money. We will put in our own money, what we have through our internal generation. The remaining whatever we would like to take and we have already tied up for the money, there is no problem for the money. 

Q: Can you provide some details on how the tie up going to be? 

A: I cannot give any information because I haven’t signed, this is in the process. Unless it is done, I cannot say anything. 

Q: Is this going to be the entire Rs 600 core? 

A: We have the ability to raise the money to pick up and there is no problem. When the time comes definitely we will try to go to the market. It is only the timing. 

Q: You would be tapping the equity markets or capital markets again? 

A: I cannot say that. We have already appointed the merchant bankers to work out; whatever way it’s good for us then we will do that. 

Q: For the entire Rs 600 crore or a part of it? 

A: That depends on the requirement; we don’t like to take more money and keep with us. Whatever is the requirement we will take only to that extent.