Chillin' out till it needs to be funded
GMR Infrastructure is hungry for financing like any other Indian Infrastructure specialist and has preferred project specific SPVs/holding companies. It recently consolidated all power projects into GMR Energy and will similarily create a separate Airports subsidiary to be spun off separately allowing all 3, GMR Infrastructure, GMR Energy and GMR Aviation to raise equity independently. They have also raised $500m last month to finance tqwo new Energy projects in AP/TN through their own SPVs reporting to GMR Infraastructure. Aviation revenues are already $250 million and will likely go up by 25% from the new T3 for its more than 50% stake in the project
From the ET quotes off KPMG who are advising GMR/similar industry projects:
The GMR group which won the bid to build, operate, modernise and expand the Male International Airport (MIA) from the Maldives government plans to leverage on its experience and focus on international opportunities, especially in South East Asia. “With not many opportunities in India, we are looking to venture out with greater focus on international opportunity,” said the official.
GMR Infrastructure had separated its power business into GMR Energy and listed it some time ago. GMR has a 54% stake in the Delhi airport and 63% in the Hyderabad airport. The airport vertical contributes Rs 929.6 crore to the company’s revenue and makes a profit of Rs 232.4 crore. “We expect airport vertical to contribute significantly to the overall revenue,” he added.
You must have read it by now in the major papers and yes that mandatory photo essay on TOI/Rediff. India’s very first Airport terminal of global standards costing a mere $3 billion is finally online, inaugurated this weekend in Delhi. Though DIAL managed t o give an estimate of $1.5 billion for the terminal, it continued spending to create the functioning terminal in time for the Commonwealth games. As the country’s busiest destination the DIAL airport was sorely needed and the finishing of a international grade terminal with 92 aerobridges for the largest Boeing 777-800 aircraft, more than 30 escalators and automatic walk ways just like the ones you enjoy at Frankfurt airport enroute to global destinations. Delhi airport already handles more than 25 million passengers and will likely get up to speed to the targeted 100 million capacity in the next 20 years ( as per masterplan, wiki) The runway of 4.43 kms and the facilities are just behind the new Dubai and Beijing Airports in size. The Airport Authority of India owns 26% of DIAL. The T3 capacity makes Delhi’s gross capacity a 60 million but the other terminals are likely to undergo sea changes during phase II of the expansion
GMR has three operational airport projects, totally 40% of its operating profit currently. Once the 34 million passenger takes off, this share will only increase. GMR officials do think this is a future demand based investment but Delhi being the nation’s busiest destination, the 34 million capacity will be utilized much sooner than imagined. The low cost carriers would continue to ride out of older terminals in Delhi but with interntional traffic and Jet and Kingfisher traffic showing signs of increasing to at least first half of 2008 levels, it looks like a steal. Delhi’s own Piccadilly line is a delayed project but the new highways and expressway would be able to handle much of the traffic.
GMR Infra has additionally won bids for the Male airport with a much smaller 9 million passenger capacity. Revenues from the MALE airport are likely to be of the order of $75 per passenger as these are incoming and leaving tourists. The Delhi Airport user charges are likely to be capped at $12 per user but that will ensure the flow accrues positively for GMR Infra and its partners Fraport and Malaysia Airports
The Maldives bid is marked by greater cashflows of $78million upfront which GMR can easily afford and the equity bill for the new project at $100million is unlikely to stretch GMR’s pockets. GMR Energy has also created two new projectised subsidiaries for power plants in South India with Fized return on equity agreements of 12%. Later projects could accrue the new ROE boundary of 16% promised by the Indian State.
The debatable parts include managing the facade that uses glass. The aesthetics are a bit narrow based as the choice of gold and copper is not something I would like to look at when I have just got down from a flight but that is a debatable opinion with India showing a lot of appetite for color and show.