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Last Updated : Jan 21, 2019 05:28 PM IST | Source: Moneycontrol.com

Brookfield, Macquarie among 7 global investors eyeing Indian airports: Report

The government wants to complete the process of privatisation before Lok Sabha elections 2019 and thus have invited bids till February 14

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Representative image.
Representative image.

Indian airports are the latest attraction among international private equity (PE) investors and airport developers, with as many as seven companies showing interest in the Centre’s airport-privatisation drive, reported Business Standard.

According to the report, German airport operator, AviAlliance; Australian AMP Capital; Canadian Brookfield Asset Management and PSP Pension fund; Sydney based Macquarie Group; French airport operator, Aeroports de Paris; and Italy’s Atlantia group have bought the bid documents for six airports.

Centre has decided to privatise and have a public-private partnership (PPP) arrangement at airports in Jaipur, Lucknow, Ahmedabad, Guwahati, Thiruvananthapuram and Mangaluru. These are being privatised after Delhi and Mumbai airports were last privatised in 2006.

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According to the request for proposal (RFP) floated by the government last month, the concessionaire will be responsible for “operations and management of the existing airport assets, as well as for designing, engineering, financing, construction and development of the further/additional air-side, terminal, city-side and land-side infrastructure for the airport”. The bidding criteria has been decided as the per-passenger revenue fee.

Also read: Global Aviation Summit 2019: Setting pace for exponential growth in India's aviation sector

“Global infrastructure funds tend to invest in single, reasonably mature operating assets where no capital expenditure is required. The six airports are already mature properties. With metro airports choked, these airports could see a strong growth drawing bidder interest,” executives from global PE investors told the daily.

According to government’s Vision 2040 document for aviation sector, passengers count in the next two decades will touch 1.1 billion from current 187 million annually. This comprises around 821 million domestic passengers and around 303 million international passengers (to and from India).

To cater to such huge passenger traffic, Indian aviation sector will have to bank on newer airports as incumbent metro airports (Delhi, Mumbai, Bengaluru) will saturate. This, according to the document, will push airport count to 200 from 99.

According to the report, the six airports on the bidding block are mature airports, handling “wealthy, middle class” passenger traffic in developed cities, which makes them a “safe bet” for global investors.

“Weak balance sheets of Indian infrastructure firms are an opportunity or the deep pocketed investors as they are lured by the prospects of acquiring properties at deep discounts,” another executive told the paper.

According to the report, as domestic infra-developers are reeling under the burden of excessive debt, global investors will “exploit the opportunity” by bidding aggressively for these airports. This is also the reason why government owned National Infrastructure Investment Fund (NIIF) might bid for the airports.

Also read: Centre to invite bids for privatisation of six airports by mid-December

“We are talking to infrastructure companies that want to bid for the airports but do not have the financial leverage. But our condition is that we are not going to be passive investors,” a senior executive from NIIF told the paper adding that it was planning to raise “a third fund worth $2 billion to invest in infra projects”.

The government wants to complete the process of privatisation before Lok Sabha elections 2019 and thus have invited bids till February 14. The deadline, however, has not gone down well with the investors who feel that “such huge investments need board approvals which is a long process”.

“This bidding date is aggressive… We asked the government to push the deadline ahead but they have refused,” executives from the firms told the daily.

Investment firms will “keenly watch” the election results as bidding under one government and execution of the deal under another government could be a dampener for the investors.

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First Published on Jan 21, 2019 04:53 pm
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