Multiple Indian airport operators are looking more favorably at the prospects of stock market listing in a bid to take advantage of soaring valuations and growing risk appetite among IPO investors. A Mint business daily report said such operators include Hyderabad-based GVK Group and Bengaluru-based rival GMR Group. The Indian government can also jump in the fray by offloading shares of the Airports Authority of India (AAI).
Although none of these companies have filed draft red herring prospectus (DRHP) in this regard with the Securities and Exchange Board of India (SEBI), GVK Group is reportedly planning an IPO of its airport holding company in September. GVK operates airports in Mumbai and Bengaluru and plans to expand this business in Navi Mumbai, Chennai, Kolkata and Goa. The company will file DRHP soon, the report cited an unnamed person familiar with GVK’s plans. Similarly, GMR Group, which counts Delhi International Airport among its projects, is planning to approach primary market in a bid to raise capital and reduce debt.
The timing may be right for new listings, say experts. As many as seven companies have raised funds through IPOs this year. These include Ortel Communications Ltd, Adlabs Entertainment Ltd, Inox Wind Limited, VRL Logistics Ltd, MEP Infrastructure Developers, UFO Moviez India, and PNC Infratech. Evidently, risk appetite is quite high among investors and rightly so, considering the healthy state of secondary market. Prospects for airport operators have also become good in recent years in light of favorable policy changes. The Airports Economic Regulatory Authority (AERA) said in 2010 that it would regulate tariffs only on airports’ aeronautical activities while leaving non-aeronautical operations like leasing retail space for shopping and entertainment outside of its purview. Since aeronautical tariffs are regulated, margins are low in the core business. However, operators support their margins through leveraging non-core operations like shopping.