BIAL to raise $200 m, eyes valuation of $2-2.5 billion

BIAL to raise $200 m, eyes valuation of $2-2.5 billion
Boby Kurian, Rajesh Unnikrishnan & Peerzada Abrar BANGALORE/MUMBAI


THE operator of the newly-opened Bengaluru International Airport is seeking a valuation of up to $2.5 billion to raise about $200 million in equity to fund the second phase of the airport’s development.
The valuation of Bangalore International Airport Ltd (BIAL), which sources put at as high as Rs 10,000 crore, or about $2.3 billion, could make it among the most valuable privately-owned domestic aviation assets. This would better the three-month-old Hyderabad Rajiv Gandhi International Airport, majority owned by GMR Group, which is estimated to be valued at $1-1.5 billion.
BIAL—40% owned by Siemens with L&T, Unique Zurich, Airports Authority of India and KSIIDC, a Karnataka government agency, holding the rest—is exploring the option of a private placement, among others, to raise part of the equity for the proposed Rs 2,500-crore expansion. It is believed that the company is exploring various possibilities and no investment bank is involved in the process.
A source said the company was seeking valuation in the range of $2-2.5 billion, leading to a possibility of 8-10% equity placement for raising over $200 million. While BIAL CEO Albert Brunner said the information on fundraising through private placement was not true, one of the investors confirmed to ET that all options are being explored.
Sources said private placement was being mulled as the company needs to shore up its equity base to go forward with fresh investments. BIAL’s current investment of Rs 2,470 crore has been funded 65% by debt, 16% by equity, 14% by support from the Karnataka government, while internal accruals and security deposits made up the rest.
The airport, which began operations just over a month ago, is expected to handle some 12 million passengers in the current year. With Bangalore’s air passenger traffic consistently beating forecasts, BIAL is planning for a second runway, entailing investments in the next 3-4 years. BIAL originally envisaged the equity component making up about 23% of the overall project cost, which was revised upwards twice from Rs 1,412 crore.
Sources said that if the government partners drag their feet on infusing fresh equity, the private promoters may have to look at the option of diluting a part of their shareholding at a significantly high valuation.
The state government is currently lobbying to reopen the old HAL airport, which was closed down in line with the concession agreement with BIAL. “With infrastructure valuation holding firm in the midst of a market meltdown, some investors may be open to the idea of cashing in a part of their equity,” a source said.
However, it is believed that the shareholder agreement has some binding clauses on the quantum of stake dilution by the promoters and for the protection of the government shareholding for a minimum period. The exact contours of the pact could not be independently ascertained.