Fairfax acquires stakes in Indian airport for $392m

The firm has invested in the country’s third-largest airport which is set to develop a new terminal and runway for expansion.

Fairfax India, a Toronto-listed investment holding company controlled by Canada’s Fairfax Financial Holdings, has acquired a 38 percent stake in Bangalore International Airport for approximately 25.22 billion rupees ($392 million; €369 million).

Of the 38 percent stake, 33 percent was bought from Indian conglomerate GVK Power & Infrastructure for 21.49 billion rupees and 5 percent was from Zurich airport Flughafen Zürich AG for $48.9 million.

GVK said the transaction would help reduce its debt burden of around 20 billion rupees, and save interest cost of about 3 billion rupees. It retains a 10 percent stake in the airport, the third largest in the country, with a 26 percent stake held by the Airport Authority of India and the state’s Karnataka State Industrial Investment & Development Corporation.

“We chose Fairfax as a partner in the airport as we have a long-standing relationship with its chairman Prem Watsa and we would look forward to partnering with them in developing Kempegowda International Airport through its next stage of expansion,” said GVK Reddy, GVK’s founder chairman and managing director. The airport is developing a new terminal and runway as part of its expansion.

Bangalore International Airport, also known as Kempegowda International Airport Bengaluru, has a 30-year concession agreement, with a further 30-year extension option, from the Indian government. Zurich airport and GVK were part of the consortium chosen in 2001 to develop the airport, the first greenfield airport project under a public-private partnership model. After three years of construction, it began operations in May 2008.

Zurich airport sold a 12 percent stake in the airport to GVK in 2009 and now fully exited from the airport through the latest transaction with Fairfax India.

In addition to the airport investment, Fairfax India has recently acquired a 51 percent stake in a logistics company Saurashtra Freight Private, which runs the largest container freight station at Mundra Port in Gujarat. Fairfax India targets investments in public and private equity, as well as debt instruments in Indian businesses for long-term capital appreciation.