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Restructuring involves vertical demerger of Non-Airport Business
New Delhi, August 27, 2020
Infrastructure major GMR Infrastructure Limited (GIL) today announced a strategic restructuring of the group involving the demerger of its Non-Airport Business after which it will emerge as a pure-play listed airports company.
The company said that its Board had, together with other group companies -- GMR Power Infra Limited (GPIL) and GMR Power and Urban Infra Limited -- announced a composite scheme of arrangement involving the vertical split demerger of the Non-Airport Business (Energy, EPC, Urban Infrastructure) of GIL into GPUIL, as a going concern alongside the amalgamation of GPIL with GIL as a step preceding the demerger.
Post the scheme, GIL will emerge as India's only pure-play listed airports company, a press release from the company said.
"The restructuring is a step in the right direction towards creating pure plays in different businesses of the Group thereby attracting sector-specific global investors and unlocking value for the current shareholders of GIL. This will also pave the way for focused growth and sustained value creation for all stakeholders over a period of time," it said.
The release said separate listing of both the Airport and Non-Airport Businesses will also help in simplifying the corporate holding structure.
"The vertical split demerger will go a long way in facilitating deeper understanding of the Airport Business independently as compared to other business verticals within the Group," it said.
According to the release, the Scheme would create a mirror shareholding of GIL in GPUIL, with all existing shareholders of GIL becoming shareholders of GPUIL in the same proportion.
The Scheme envisages issue of 1 additional share of Rs. 5 each of GPUIL for every 10 shares in GIL of Re.1 each as on the record date.
All existing shareholders of GIL will continue their same shareholding in GIL.
The Scheme also envisages amalgamation of GPIL with GIL as a step preceding demerger.
The appointed date for the Scheme, being the date on which the undertakings shall vest in the respective resulting companies, has been fixed at April 1, 2021.
According to the release, over the last few decades, GMR has significantly grown and diversified into multiple segments within the broader infrastructure space -- Airports, Energy, Urban Infrastructure, SEZ, EPC, and so on.
"At an initial stage of growth journey, a combined housing of various segments was required to incubate, seed, ramp-up and grow them, both from management and funding perspective, to reach a stage where they can stand and sustain on their own.
"Each of these multiple business segments has distinct business models, operating nuances, capital commitments, risk & return profile, etc. These businesses have grown disproportionately over a period of time and are now at varied stages of their evolution from an overall Industry perspective. As these businesses mature and chase next phase of their growth, it would be strategically apt to segregate them," it said.
The release said the Airport Business had grown multi-fold both at home and abroad and is expected to benefit with enhanced focus and specialization, building further on its capabilities and strong brand presence.
"The Scheme is expected to be in the best interests of the companies and their respective shareholders, employees and creditors," it said.
Grandhi Kiran Kumar, Managing Director & CEO of GMR Infrastructure Limited said: "Over the years, GIL has grown multi-fold and with various divergent businesses housed under one holding structure. Shareholders have been suggesting us to offer Pure Plays listed vehicles to ride the growth trajectory of matured and scaled-up Infrastructure Businesses. We have been closely evaluating various options and as a step in that direction, post the separation of Non-Airport Business, GIL will be 'India's only Pure Play listed Airports Company' and continue its growth journey."
"We are equally excited that our Non-Airport Businesses in GPUIL, with our deep understanding and pre-qualifications backed by superior execution track record is well positioned to create value for all stakeholders. We at GMR Group are committed and will continue to evaluate various strategic options to unlock shareholder value," he added.
The Scheme is subject to the customary approvals from the Stock Exchanges, SEBI, NCLT, shareholders and creditors, the release added.
GMR Group's Airport portfolio includes the Indira Gandhi International Airport in New Delhi, Hyderabad's Rajiv Gandhi International Airport and Mactan Cebu International Airport in partnership with Megawide in The Philippines. Greenfield projects under development include airport at Mopa in Goa and airport at Heraklion, Crete, Greece in partnership with GEK Terna. The GMRMegawide consortium has won the Clark International Airport's EPC project, the second project in Philippines. The Group has recently signed the Concession Agreement for the development and operation of a greenfield airport at Bhogapuram in Andhra Pradesh. The group recently signed concession agreement to commission, operationalize and maintain the Civilian Enclave at the Bidar Airport in North Karnataka.
GMR Group is developing airport cities on the commercial land available around its airports in Delhi, Hyderabad and Goa.
The Group's Energy business has a diversified portfolio of around 4,995 MW, of which -3,040 MW of Coal, Gas and Renewable power plants are operational and around 1,955 MW of power projects are under various stages of construction and development. The group also has coal mines in Indonesia, where it has partnered with a large local player.
Transportation and Urban Infrastructure division of the Group has four operating highways project spanning over 1,820 lane km. The Group has a large EPC order book of railway track construction including Government of India's marquee Dedicated Freight Corridor project. It is also developing multi-product Special Investment Regions spread across about 2,500 acres at Krishnagiri in Tamil Nadu and 10,400 acres at Kakinada in Andhra Pradesh.