GMR Airports Infrastructure completes major merger, boosting airport operations

GMR Airports Infrastructure Ltd (GIL) has announced the successful completion of a significant corporate restructuring, merging GMR Airports Ltd (GAL) and GMR Infra Developers Limited (GIDL) into GIL. This merger, effective from 1 April 2023, marks the culmination of a strategic move initially announced on 19 March 2023. The consolidation aims to streamline the corporate structure and position GIL to capitalise on the expanding aviation sector.

GMR Airports Infrastructure Ltd: A Strategic Merger for Growth

The merger represents a pivotal moment in GIL’s ongoing efforts to enhance shareholder value and simplify its corporate framework. This restructuring process began in 2020 with GMR Airports Infrastructure entering a strategic partnership with Groupe ADP, which acquired a 49% stake in GAL. This move was followed by a demerger of GIL’s non-airport businesses into GMR Power and Urban Infra Ltd (GPUIL) on 31 December 2021. Consequently, GMR Airports Infrastructure, already the second-largest private airport operator globally, became the sole pure-play airport company listed in India.

With GAL now fully merged into GMR Airports Infrastructure, the latter has gained complete ownership of its airport operations. Groupe ADP, previously a 49% shareholder in GAL, now holds a significant stake in GIL, reflecting the continued partnership between the two entities.

New Shareholding Structure and Market Impact

Following the merger, the shareholding structure of GIL has been updated. GMR Group remains the largest shareholder with a 33.8% stake, while Groupe ADP holds 32.3% of the equity. The public retains a 33.9% share. This new structure has been achieved through the issuance of ordinary equity shares and Optionally Convertible Redeemable Preference Shares (OCRPS) to Groupe ADP. The total number of equity shares now stands at approximately 1.06 billion, resulting in a market capitalisation of around ₹99,518 crore (approximately USD 11.9 billion).

Merger Benefits and Strategic Advantages

The merger brings several advantages. It consolidates the airport assets under GIL, enhancing operational efficiency and improving corporate governance through the addition of Groupe ADP directors. The merger also strengthens GIL’s balance sheet and facilitates greater access to growth capital. The expanded capital base and improved profitability of the airport assets are expected to increase GIL’s market capitalisation, potentially leading to its inclusion in more indices and attracting additional equity investments.

Further benefits include the improved efficiency of cash flow management and the generation of additional free cash flow to equity (FCFE), which is anticipated to boost shareholder returns.

Expert Insights on the Merger

Mr. GM Rao, Chairman of GMR Group, expressed his satisfaction with the merger’s completion, describing it as a testament to the group’s commitment to growth and excellence. He welcomed Groupe ADP to the listed entity and highlighted the merger as a transformative event that would enable GIL to expand its reach and enhance service delivery across various stakeholders, including shareholders, employees, passengers, and airlines.

Mr. Kiran Kumar Grandhi, Corporate Chairman, echoed this sentiment, noting that the merger aligns with GIL’s strategy to simplify its corporate structure and strengthen its balance sheet. He anticipated that the merger would position GIL for future growth and enable it to leverage the combined strengths of GMR Group and Groupe ADP to deliver superior experiences for customers and stakeholders.

A New Era for GMR Airports Infrastructure Ltd

The completion of this merger marks a significant milestone for GMR Airports Infrastructure Ltd. By integrating GAL and GIDL into GIL, the company has streamlined its operations and positioned itself to capitalise on the growth of the aviation sector. With a strengthened balance sheet and enhanced corporate governance, GMR Airports Infrastructure is well-placed to drive future growth and deliver increased value to its stakeholders.