InvestorQ : Is it true that Tata group is buying out substantial portion of the equity of GMR Airports? Will it benefit the Tata Group and how will it impact stock of GMR?
Dawn Cherian made post

Is it true that Tata group is buying out substantial portion of the equity of GMR Airports? Will it benefit the Tata Group and how will it impact stock of GMR?

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Dilmini Mercia answered.
1 year ago
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You are correct. Now only has GMR sold the stake but the Tata led group is also likely to rejig investment in GMR Airports to meet regulatory norms. It may be recollected that a Tata Group-led consortium had taken a stake in GMR Airports after GMR had officially decided to dilute its stake in its airport arm to 49% in order to meet the regulatory requirement.

Please remember that while the Tata Group has limited ability and headroom to increase its stake in GMR Airports, its partners like GIC of Singapore are under no such restrictions on stake holding. Hence Government Investment Corporation (GIC) of Singapore is likely to increase its stake in GMR Airports. Currently, GMR Airports owns and operates Delhi International Airport and it also runs the Hyderabad International Airport.

However, this Tata stake is not without its share of controversies. For example, the investment proposal for Tata Groups to invest in GMR Airports has already run into controversy with several local airlines highlighting potential conflict of interest. That is because the Tata Group also holds stakes in two airlines viz. Vistaara and Air Asia. Owning the service provider and the infrastructure provider does create a conflict of interest for the Tata Group. The case could actually be a benchmark as the civil aviation ministry is in the midst of privatizing several airports. Tata Group, as well as other airline promoters, are expected to bid for airports and it remains to be seen how the conflict of interest issue is amicably resolved.

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