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GVK in talks with Siemens for Bial stake

23 Dec 2009 Evaluate

GVK Power and Infrastructure Ltd is in talks with Siemens Project Ventures GmbH on picking up some or all of the German company’s stake in Bangalore International Airport Ltd, or Bial, which runs the new Bengaluru International Airport, according to sources. Siemens holds a 40% stake in Bial, but is required to stay invested for a specific period in accordance with the terms of the ownership agreement. GVK, therefore, plans to enter into an understanding with Siemens on buying the stake at a future date at a predetermined price.

 

GVK is also planning to buy Bidvest Group Ltd’s 27% stake in the Mumbai airport to add to the 37% it holds in Mial. If the plan to buy the Siemens stake succeeds, GVK will have majority control over two of India’s top airports, and compete with GMR Infrastructure Ltd, which runs the Delhi and Hyderabad airports. GMR also runs the Istanbul Sabiha Gokcen International Airport.

 

After acquiring a 17% stake in Bial from India’s largest engineering firm Larsen and Toubro Ltd (L&T) earlier this month for Rs 686 crore, GVK has emerged as the second largest stakeholder in the company with a 29% stake. In November, GVK had acquired 12% of Zurich Airport’s stake in Bial for Rs484.6 crore. Both the deals priced Bial shares at Rs105 apiece.

 

As the largest shareholder in Bial, Siemens needs to stay invested for at least three years before it can dilute up to 14% and seven years before it exits the venture. While L&T has sold its entire stake, Zurich still holds a 5% stake after selling 12% in November. The Airports Authority of India, representing the Union government, and a local government body, the Karnataka State Industrial Investment and Development Corp. Ltd, own 13% each in the firm.

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