GVK ties up debt for first phase of Rs 55 bn Navi Mumbai airport project

In talks to raise $1 billion via bonds to refinance existing loans

Navi Mumbai airport project
The site where the Navi Mumbai International Airport will come up
Aneesh Phadnis
Last Updated : Jul 07 2018 | 9:53 PM IST
GVK group has tied up debt for first phase of Rs 55 billion Navi Mumbai airport project and is in talks with banks to raise $ one billion via bonds to refinance Mumbai airport project loan.

The Hyderabad based infrastructure major on Saturday announced it has achieved financial closure for the construction of the Navi Mumbai airport. Yes Bank is the lead bank for providing debt for the project. GVK refused to disclose the loan amount.

The project is being executed as a public private partnership between GVK-owned Mumbai International Airport Limited (MIAL) and the City and Industrial Development Corporation. As per the concession agreement signed between MIAL and CIDCO, 2021-end has been set as a deadline for commercial launch of  Navi Mumbai airport. However, Maharashtra government is keen to launch the operations by December 2019.

Only 90 per cent of the 1160 hectare Navi Mumbai airport land was handed over to the airport development company today as over half of 2700 plus project affected families are yet to shift to alternate areas. Pre development works including hill cutting and river diversion are underway.

GVK Reddy, GVK group chairman, "I am extremely happy that we have achieved the financial closure on schedule. This will now enable us to focus on the next steps, which is the construction and completion of the first phase of yet another landmark airport in India".


Simultaneously the GVK group is also in talks with banks and financial institutions to refinance $ one billion worth loans given for development of Mumbai airport.

Last month the board of MIAL gave its approval to raise overseas bonds along with increasing borrowing limits for the company. Also MIAL has been converted from a private limited to a public limited company. This would make it easier to attract capital as banks and institutions have restrictions on lending capital to private limited companies.

If successful, this would be second loan restructuring of Mumbai airport loans. Last year, MIAL had refinanced Rs 61.40 billion worth long term loans resulting in interest savings. It was also extended Rs 8 billion working capital to retire existing working capital debt.

According to sources, GVK may find it tough to carry out bond issue as the cost of borrowing up in global markets due to hardening of yields.

GVK has been looking to restructure debt at group level through asset sales and refinance. 


Last year, the GVK group exited Bengaluru airport selling its stake to Canadian financial services firm Fairfax in two tranches for around Rs 30 billion. The funds raised from stake sale was used to cut debt.

Last month the group's chief financial officer Isaac George said the company proposes to file for an initial public offering of its airport vertical. The airport vertical has debt of around Rs 80 billion and funds from share sale will be used to pare debt, he said.
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