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Prem Watsa to buy 33% in Bangalore airport for Rs 2,149 crore

GVK Power & Infrastructure hopes to reduce its debt burden by around Rs 2,000 crore. This move would result in saving around Rs 300 crore in interest costs annually.

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The debt-ridden GVK Group on Monday announced that it would divest 33% stake in Bangalore International Airport Ltd (BIAL) to India-born Canadian investor Prem Watsa led Fairfax India Holdings Corporation and Fairfax Financial Holdings Ltd through their wholly-owned subsidiaries in Mauritius, for an aggregate investment of Rs 2,149 crore.

GVK Power & Infrastructure said in a statement that the company hopes to reduce debt burden by around Rs 2,000 crore. This would result in saving around Rs 300 crore in interest costs annually.

The transaction is expected to be completed by the mid-2016. Goldman Sachs and DSP Merrill Lynch are financial advisors to GVK while Cyril Amarchand Mangaldas is their legal advisor.

GVK Airport Developers, a wholly-owned subsidiary of GVK Power & Infrastructure, had initiated a financing process last year to reduce its debt obligations to its lenders. The infrastructure major received multiple offers, from which the Fairfax Group was selected.

Bangalore International Airport Ltd (BIAL) owns and operates the Kempegowda International Airport Bengaluru. The airport started operations in May 2008.

In BIAL, GVK Group holds 43% stake, Siemens Project Ventures GmbH 26% and Flughafen Zurich AG Ltd 5% while state-owned entities Airport Authority of India and Karnataka State Industrial Investment & Development Corporation Limited hold 13% each.

GV Sanjay Reddy will continue to lead the management team as managing director of BIAL and GVK Reddy, chairman and managing director, GVK, would remain a co-chairman.

GVK Reddy said this is an important and successful milestone in deleveraging their balance sheet.

"All proceeds from this stake sale will be used to bring down our debt obligations. We chose Fairfax as a partner in BIAL as we have a long standing relationship with its chairman, Prem Watsa, and we would look forward to partnering with them in developing Kempegowda International Airport through its next stage of expansion as we develop a new world-class Terminal 2 and a new runway," he said in the statement.

Watsa said it would work closely with all stakeholders to manage the BIAL stake.

Watsa's Fairfax India Holdings Corp now holds about 30.65% in IIFL Holdings. Thomas Cook (India) Ltd is also promoted by Fairfax Financial through its wholly-owned subsidiary Fairbridge Capital (Mauritius).

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