The conglomerate is expected to raise $500 million through a private placement of shares in Adani Airports Holdings before an eventual initial public offering. Adani controls Mumbai airport, India’s second busiest, as well six regional facilities, and is targeting a valuation of Rs 25,500-29,200 crore ($3.5-4 billion) for the business.
“Discussions were held between top company officials and potential investment bankers. At least half a dozen global banks and a bunch of domestic bankers have met top officials recently,” said one of the people cited above. “However, the group is awaiting better air passenger numbers as the Covid pandemic significantly reduced passenger traffic. They would like a year-end listing.”
The Adani Group didn’t respond to queries.
The Gautam Adani-led business house entered the airport sector in 2019.
Rs 30k-cr Capex Plan for Airports
Incubated within Adani Enterprises, Adani Airports won the mandate to modernise and operate six airports – Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram – through the Airports Authority of India’s tendering process. The unit has become the country’s top airport platform, catering to at least 10% of India’s air passenger traffic, exceeding 200 million people in FY20.
In August last year, the group announced that it had acquired a 74% stake in Mumbai International Airport (MIAL), which runs Chhatrapati Shivaji Maharaj International Airport. This gave Adani ownership of the upcoming Navi Mumbai Airport, in which MIAL holds 74%. Adani Airports has debt of Rs 4,100 crore while that of AEL amounts to Rs 15,293 crore.
“In the three-five year plan, we would have a total capex in the airports of about ?30,000 crore estimated and the debt from that will be approximately ?20,000-21,000 crore,” Adani Enterprises CFO Robbie Singh said on an investor call in May.
“They are cash-making businesses and they already operate. They have their own capacity to borrow, so from our point of view, our commitment is to the equity portion of the airports, of which a majority of what equity was required we’ve already invested.”
Adani doesn’t see a significant commitment of equity beyond what’sneeded for the development of Navi Mumbai airport “and some equity that is required for the next three years possibly when we take over,” he added.
MIAL posted revenue of Rs 3,847.4 crore in FY19, up from Rs 3,545.2 crore a year earlier, with EBITDA rising to Rs 1,594.3 crore from Rs 1,496.3 crore, according to India Ratings & Research.
“MIAL’s financial profile was severely impaired by the outbreak of Covid-19, the resultant lockdown and the continued restrictions on airlines’ operations,” the rating agency said in January. “The total passengers handled by the airport plummeted 91.9% yoy to 1.86 million in 1HFY21. Ind-Ra believes that MIAL’s liquidity crisis in FY21 was aggravated on account of Covid-19, resulting from a constrained operating cash flow.”
The group led by the second richest Indian Gautam Adani has overall debt of more than ?1.47 lakh crore, following multiple acquisitions in the port, power and airport sectors.
“Long-term fundamentals for Indian aviation remain very solid in spite of the short-term impact of Covid pandemic,” said Kapil Kaul, CEO and director, CAPA Advisory. “Given there is a lot of capital available right now which is chasing high return assets, raising funds will not be a challenge.”
Adani has spun off several of its businesses—Adani Green, Adani Power Transmission, Adani Total Gas—and raised equity via strategic stake sales to both financial and strategic investors such as Qatar Investment Authority and Total of France to improve shareholder returns.