Fairfax India, the Indian unit of billionaire Prem Watsa’s Canadian investment firm, continues to create market buzz with another strategic acquisition when it acquired yet another 10% stake in Bangalore International Airport Limited, or BIAL, for $255 million. Such a deal significantly strengthens Fairfax’s control in the airport venture and lifts ownership levels to a majority of 74%. This step further strengthens the belief of Fairfax India that there is growth still left to be tapped from the airport in addition to the solid performance put forth by BIAL under its chief executive officer Hari Marar.
Increase Fairfax India’s stake in BIAL
Fairfax India’s new investment is an important component of its long-term strategy to further consolidate its position in the rapidly growing Indian infrastructure sector. The wholly-owned subsidiary of Fairfax India will hold 30.4% of BIAL, and its subsidiary Anchorage Infrastructure Investments Holdings will hold the remaining 43.6%. The Canadian firm acquired BIAL after purchasing a 7% stake for $175 million in 2023, which had boosted its ownership to 64%.
This acquisition of an additional 10% stake by Fairfax India from Siemens Project Ventures would help the company take its total ownership to 74%, an important juncture in its continuous investments in the airport infrastructure sector in India. The deal is set to be completed in the first quarter of the following year and the purchase price agreed has been committed to the buyer in three separate installments.
Transaction Analysis and Payment Schedule
The payment, $255 million investment, will be made in three installments. The first one is at the completion of the deal at the end of the first quarter in 2025. The remaining two payments will be made in August 2025 and July 2026, hence providing Fairfax India with a structured commitment from funds at acquisition time. But it will require approval by Fairfax India’s shareholders, to be sought via a special meeting that has been set for January 2025.
BIAL in India’s Growth in Airport Infrastructure
BIAL is a private organization in Bengaluru that enjoys the concession right of development, designing, finance construction, and also operating with managing through the PPP with the Government of India the Kempegowda International Airport. BIAL’s concession period with the Government runs until 2068 and hence has always had the much longer growth curve for the Company. BIAL’s Revenues were Outstanding, at $305 million last year fiscal that portrayed how good things have gone on in this airport.
It can be stated that Kempegowda International Airport, Bengaluru, is one of the most important airports in India with the rapid expansion of its world-class facility, and hence, is attracting not only domestic but also international travelers. Indian air travel, as seen to be soaring ever since the pandemic, is being expected to make BIAL one of the responding airports.
Strategic Relevance of the Investment
Fairfax India founder, Prem Watsa, was much upbeat about future BIAL prospects. “Additional investment by Fairfax is an evidence of their faith in growth prospects of this airport and in its management’s capability to take best advantage of such opportunities.” Indeed, Fairfax India was a pretty good investment by any stretch of imagination. For, Hari Marar had headed BIAL through a stellar success track.
This deal shows Fairfax India’s sustained interest in the infrastructure sector in India, more specifically in the aviation sector. This investment will also be consistent with Fairfax’s overall strategy to tap into India’s growing economy where sectors like aviation, real estate, and infrastructure are expected to boom in the near future.
Key stakeholders of BIAL and future outlook
BIAL has a very diverse bunch of shareholders. AAI and KSIIDC each hold 13% shareholding in BIAL, while the rest of the shareholding is by private companies such as Fairfax India. This means that BIAL operations are closely in line with the objectives of the government as well as the expertise of the private sector.
Looking ahead, the role that BIAL would be playing for developing India’s aviation infrastructure seems certain. Air travel demand continues to expand with favorable government policies promoting airport modernization; the future does look promising for BIAL. Fairfax India holding an increased share in the company is clear indication of growing significance of the sector in the overall Indian economy.
Conclusion
Fairfax India is considering purchasing the additional 10% stake of Bangalore International Airport as a strategy to consolidate its leadership position over one of the most promising projects for infrastructure growth in India. This will raise the shareholding for Fairfax to 74%, hence justifying Fairfax’s confidence that such an infrastructure is bound for long-term development. Fairfax India is well placed to capture the fast-growing aviation business in India as BIAL continues on its path of growth, prosperity and success under such sound management and the enabling government. Payments for this transaction will be released early in 2025 and then subsequently each year thereafter.
This development shows that the infrastructure sector of India, especially airports, is becoming very important, and Fairfax India continues to pursue this growth. For investors and stakeholders, the future of BIAL is very promising, and the increased stake for Fairfax India only strengthens its position in this vibrant market.
Refer :
Economic Times, Link to article
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