SummaryGMR Infra (GMR) has signed a definitive agreement with Malaysian Airports (MAHB) to divest its 40% equity
GMR Infrastructure Ltd has signed a definitive agreement with Malaysian Airports (MAHB) to divest its 40% equity stake in Turkey’s Sabiha Gokcen Airport (ISG) for ~EUR225 million (~R1,910 crore). The company's equity investment in ISG was ~Euro 71.6 million, indicating an exit P/BV of 3.1x. The deal will result in ~R,1050 crore profit (post tax) for GMR. Further, ~R1300 crore of debt related to the project (GMR’s share) will go off the company’s books. The transaction further reinforces the company's intent of deleveraging its balance sheet via asset monetisation. Our revised SOTPbased target price stands at R30 (earlier R26). Maintain ‘buy’.
GMR, in consortium with Malaysian Airports (20%) and Turkish conglomerate Limak, had won the mandate to build the ISG in 2007 and operate it for 22 years. The total project cost was ~euro 450 million with a debt/equity of ~3:1. The company had taken over operations of the airport from May 2008. Construction of a new terminal had been completed in a record period of 18 months, 12 months ahead of schedule.
Passenger growth at ISG had been robust over the years. The airport, with capacity to handle 25 million passengers, handled 15.3 million passengers in FY13, up 11% y-o-y. We revise our target price to R30 per share to factor in the higher-than-expected asset monetisation value.