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France’s Groupe ADP’s intention to buy a 49% stake in GMR Infrastructure’s airport business is a win-win situation for both. The deal has set a good precedent for India’s airport privatization plans. This transaction highlights the confidence that big conglomerates like Groupe ADP and Zurich Airport International AG have in Indian airports. The arrival of new players will intensify competition among Indian airports but will prove beneficial for the airlines that are struggling to get additional slots at India’s airports, especially in the metros.

This move will help ADP gain access to one of the world’s fastest-growing aviation markets. According to GMR’s press release, as per 2019 passenger statistics, the combined number of passengers handled by GMR Airports and Groupe ADP stands at 336.5 million, the highest in the world. The 49% stake gives ADP a say in airports operated by GMR in India and abroad, including lucrative ones like New Delhi and Hyderabad, along with the new deals that GMR has recently won to develop airports in Goa, Nagpur, and Bhogapuram. The talent pool at GMR Infrastructure’s airport business is a strategic asset. The expertise brought by ADP to the Indian aviation industry is expected to improve the quality of service, enhance passenger experience, and set new industry-defining benchmarks when it comes to retail, operations, engineering, etc.

For GMR, this deal helps it gain access to global markets and create new avenues of growth. With its airport business faring much better than other projects over the past few years, the decision to monetize its airport business will give it a fresh lease on life as it looks to partially address the issue of mounting debts. The fresh infusion of capital by Groupe ADP will give GMR a much-needed boost as it looks to get back on track and take advantage of a wider scale of synergies that ADP brings to the table.

For more information on this topic or to schedule a meeting, please email Srihari Daivanayagam at srihari.daivanayagam@frost.com.

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