Changi Airport makes fresh attempt to enter India

After several false starts, Singapore's Changi Airport is making a fresh bid to get a firm foothold in India, which has eluded it for many years.

Changi Airports International, an arm of the Changi Airport Group, which runs the Singapore airport, is said to be in talks with Hyderabad-based GVK Group to acquire a stake in its lucrative airport business.

GVK operates two of India's busiest airports in Mumbai and Bengaluru.

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If the deal goes through, the Changi-GVK combine will handle over 40 million passengers a year, making it the biggest player in India's airports market.

Bengaluru-based GMR Group, which operates the Delhi and Hyderabad airports, handles 37 million passengers a year.

However, the alliance will have less capacity in India compared to GMR's.

GVK can handle 51 million passengers a year, while GMR has a capacity to handle 72 million per annum.

The Bengaluru and Mumbai airports are collectively valued at close to Rs 13,000 crore (Rs 130 billion) at recent deal prices.

Changi has been looking to enter India for a while.

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It tied up with Bharti Group's Sunil Mittal to bid for the Delhi airport privatisation, but got cold feet in the last moment and dropped out of the race, according to people in the know.

It tied up with Tata Realty Infrastructure (Tatas had 51 per cent and the rest was with Changi) to bid for airport projects in India, especially in non-metros.

It also made a bid few months ago to acquire Siemens' 14 per cent stake in the Bengaluru airport. But GVK matched the offer and bought the stake.

The negotiations with GVK would be the Singaporean company's fourth attempt to make a comeback in India.

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Changi has till now concentrated on operations in Singapore.

It has not spread itself overseas in a big way like many other airport operators, including Fraport and Zurich Airport.

GVK is also in talks with private equity firms to raise fund after it acquired 13.5 and 14 per cent in Mumbai and Bengaluru airports, respectively, in the last few months.

A deal with Changi will help GVK both in funds and technical expertise in bidding for the Navi Mumbai airport.

The group has the first right of refusal for the Navi Mumbai airport bid.

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According to aviation analysts, if the deal sails through, it would create a win-win situation for both companies.

It would give Changi Airport a stake in running the Mumbai and Bengaluru airports, India's second- and third-busiest airports.

GVK has 50.5 and 43 per cent in the Mumbai and Bengaluru airports, respectively.

In an emailed response, CAI spokesperson Ivan Tan said, "CAI, as an airport investment company, considers market opportunities all the time, but it's not our practice to comment on market speculations and unsourced media reports."

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In a notice to the Bombay Stock Exchange, GVK said the news regarding Changi's plan to buy 26 per cent in its airport business for Rs 2,200 crore (Rs 22 billion) was speculative and it was not aware of the source of information. GVK did not respond to email queries.

Its stocks on Monday rose 7.9 per cent to end at Rs 11.88 on the BSE.

"Changi is trying hard to get a foothold in India. GVK is desperate to raise cash.

"Its strategy has been to consolidate its stake in the Mumbai and Bengaluru airports.

"It is keen on other airport projects in India and abroad.

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"The group has spent a lot of funds in acquiring additional stakes in these airports. It can't go alone if it wishes to continue with the strategy," said an aviation consultant.

In October, GVK paid Rs 1,140 crore (Rs 11.4 billion) to acquire Bid Services Division's 13.5 per cent stake in the Mumbai airport.

Its group chief financial officer, A Issac George, had said the company was looking for private equity investors in the airport holding company, which would generate cash to fund the deal and repay debt.

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Moreover, the tie-up would also help GVK in bidding for the Navi Mumbai airport.

"The airport will be an expensive project," the analyst added, as the developers would have to acquire land and spend on site preparation, which included flattening of hills, diversion of river and filling of marshy land.

Changi has a 26 per cent stake in Bengal Aerotropolis Projects Ltd, which will construct an airport to handle one million passengers annually at Durgapur in West Bengal.

Previously, the Singapore company was involved in providing technical assistance to the Mumbai airport and Nagpur's cargo hub project.