• Watsa’s Bangalore International Airport investment plan gets government nod

    The government has given the long-awaited security clearance to billionaire Prem Watsa’s proposed investment in the GVK-led Bangalore International Airport (BIAL).

    A GVK spokesman confirmed the development and said this will pave the way for the deal “to be concluded very soon”.

    Sources said the security clearance had been recommended by the Ministry of Home Affairs several months earlier. The Ministry of Civil Aviation however had kept some approvals pending and sought several clarifications from both parties as well as from the Karnataka state government.

    Indian-born Watsa’s Toronto-based Fairfax Group had in March last year, announced its decision to buy a 33% stake in BIAL from GVK Group for Rs 2,149 crore, valuing the eight-year-old airport at about Rs 6,500 crore. A month later, Fairfax signed another deal to buy 5% stake held by Flughafen Zurich AG in BIAL.

    GVK had said the sale was one of its fund-raising steps to reduce debt. The conglomerate has total debt of over Rs 22,000 crore on its books.

    The Bangalore airport is Fairfax Group’s largest investment in the country since it opened an India-dedicated investment company in 2014. It is also the company biggest bet on India’s infrastructure sector.

    Post the deal, Fairfax will hold 38% of BIAL, followed by Siemens Project Ventures with 26% while the governments of India and Karnataka will each own 13%. GVK will hold the remaining 10%.

    When contacted, BIAL managing director Sanjay Reddy told ET that GVK will “continue to be responsible for the management of the company and also operate the airport. The MD and CEO will be from GVK,”

    Separately, a person close to the development said that Fairfax may nominate Watsa himself, Harsha Raghavan, CEO of its affiliateFairbridge Capital and Deepak Parekh, chairman of HDFC and an independent director at Fairfax as board representatives in BIAL. The rest of the board composition is yet to be decided.

    According to its latest annual report, BIAL’s board as of end FY16 had former Air India chief and chief-secretary Karnataka governmentArvind Jadhav as chairman, GVK Reddy as co-chairman, Sanjay Reddy as managing director, GVK CFO Issac George, GVK board member Krishna Ram Bhupal, Airports Authority of India’s Sudhir Raheja, Venkatramana Hedge from the aviation ministry, IAS officers Vandita Sharma and Arvind Shrivastava, DR Kaarthikeyan, as well as Basil Justin Wetters, Johannes Schmidt, Pramod Bhambani and Daniel Schmucki from Siemens. S Balasubramanian and A Meher Prasad were independent directors. A few months earlier, Subhash Chandra Khuntia, the new chief secretary of the Karnataka government took over as chairman, BIAL.

    Bangalore airport handled more than 20 million passengers last year. It now has a built capacity to cater to 20 million passengers annually but upon completion of its expansion plans the number can go up to 50 million. Michael Irvin Authentic Jersey

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