Fairfax fully committed to Bengaluru airport investment, says BIAL CEO Hari Marar

Hari Marar, Managing Director and CEO of Bangalore International Airport Limited (BIAL)

Prem Watsa's Fairfax India Holdings Corporation is fully committed to its investment in the Bengaluru airport, said Hari Marar, Managing Director and CEO of Bangalore International Airport Limited (BIAL) in an exclusive interview with Moneycontrol.

"As Prem Watsa (chairman of Fairfax India and Indian-Canadian billionaire), often says, 'We do not own the airport, and it cannot belong to any private entity; it always belongs to the city and its people. We are only temporarily the custodians of the airport.' I think that is the approach with which Prem views his ownership of the stake in Bengaluru airport," Marar  said.

Fairfax currently holds a 57 percent stake in the airport, while Siemens holds a 17 percent stake. The remaining 26 percent is equally owned by the Karnataka government through Karnataka State Industrial and Infrastructure Development Corporation (KSIIDC) and the Union government through the Airport Authority of India.

Expansion plans 

Marar outlined the future expansion plans at Kempegowda International Airport, Bengaluru, stating, "As far as future expansion is concerned, from a core aviation standpoint, there are many things going to happen. Once international airlines transition to Terminal 2, Terminal 1 will undergo refurbishment to convert the international section back into a fully integrated domestic terminal."

"Our initial project will be the refurbishment of T1, followed by the expansion of T2 to accommodate the growing traffic. Airside improvements, including the construction of a new crosskeys taxiway, will also be necessary. All of these initiatives require significant investment," he added.

"It may not be widely known, but we have distributed dividends only twice in the last 15 years. The intention is to retain earnings for reinvestment in airport development. Over the next four years, we anticipate generating sufficient internal equity and accruals to fund our expansion plans. Any additional capital required will be raised through the markets" Marar said.

He further explained, "Airports, particularly private ones like Bengaluru, generate their own equity through internal accruals, which contributes to future expansion."

Kempegowda International Airport currently ranks as the third busiest airport in India.

In 2017, Fairfax acquired a 48 percent stake in BIAL from GVK Power and Infrastructure. Subsequently, it purchased an additional 5 percent from Flughafen Zurich AG, the owner and operator of Zurich airport. In 2018, Fairfax increased its stake to 54 percent by acquiring an additional 6 percent from Siemens Project Ventures GmbH.

Last month, Fairfax announced its intention to acquire an additional 3% equity interest in BIAL from Siemens Project Ventures GmbH for $75 million through its wholly-owned subsidiary. The transaction, subject to certain closing conditions, is expected to be completed in Q2 2023.

A statement from Fairfax reads: "Fairfax India has agreed to further acquire a 7% equity interest in BIAL from Siemens Financial Services (SFS) for an additional $175 million, subject to performance conditions by BIAL and other closing conditions to be evaluated after October 31, 2023."

Prem Watsa, chairman of Fairfax, in a statement, had said, "This additional investment in BIAL reinforces our confidence in the continued success and opportunities at the airport. With the opening of KIA's Terminal 2, we anticipate significant growth in the coming years. We have had excellent support from Siemens through SFS, and we look forward to our continued partnership."