GMR eyes foreign funds, low cost of capital with merger completion

livemint.com:

NEW DELHI : GMR group expects the debt cost for its airports to decline, ensuring significant inflow from passive funds, as well as foreign fund managers following the merger of GMR Airports Ltd with group holding company GMR Airports Infrastructure Ltd, Saurabh Chawla, executive director, finance and strategy at GMR Airports Infrastructure, told Mint. The merger is expected to be concluded around March, but the procedures indicate that the company may complete the merger by February, he added. “With the completion of the merger, the market capitalization of the listed entity GMR Airports Infrastructure Ltd will double and that will bring us several benefits.

First, we will get greater weightage in many midcap indices, thereby attracting substantial flows from passive funds and foreign fund managers, as we will continue to be the sole airport business listed on the Indian exchanges." “The second, which is very important, is that we will get better access to cheaper capital and that would mean a reduction in the cost of capital. This will come in handy when we refinance existing loans," Chawla said.

As part of a comprehensive restructuring effort, GMR Airports Infrastructure (formerly GMR Infrastructure Ltd) announced in March its merger with GMR Airports, which manages Delhi and Hyderabad airports. It will position French airport operator Groupe ADP to be the second-largest shareholder in the combined entity.

In the September quarter, GMR had obtained a no-objection certificate from the Reserve Bank of India and stock exchanges for the merger. The application was also submitted with the National Company Law Tribunal (NCLT).

“All the key approvals have been received, including the shareholders’ approval on 2 December. We