DNA Money Edit: Adani Group win stirs up airports space

The Indian aviation infrastructure industry is witnessing a tectonic shift, whose impact is likely to be felt in the coming years. While GVK and GMR Group, the winners of the first round of airport privatisation more than a decade ago, continue to expand at their own pace, the entry of Adani Group in the sector has made people sit and look up. The ports-to-power conglomerate has made a clean sweep by winning all the six airports thrown open for privatisation – Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, Mangaluru and Guwahati. Interestingly, GMR, which is the only player which bid for all the airports, made much lower offers in comparison to Adani Enterprises. While Adani Group sees value in the bids offered, critics claim that it is naiveté on part of the new player to offer such high bid.

The win of Thiruvananthapuram airport by Adani has clearly not gone well with the Kerala government, which was one of the bidders. The state's chief minister Pinarayi Vijayan has already approached the High Court, alleging flaw in the process to allow a single bidder to win all the bid, despite having no experience. The outcome of the legal proceedings will be interesting to watch.

Further, it is not just that Adani is looking to run smaller airports. Just days prior to winning the bid, Adani Group offered to buy 23.5% stakes of Bidvest and ACSA – two private equity partners of GVK Airports Ltd in Mumbai airport. GVK Group, which very well knows that Adani will never settle for minority stake felt the heat. As a result GVK ended up acquiring the 13.5% stake of Bidvest in order to keep Adani at bay, though it has long been looking to raise the funds by selling some of its own stakes.