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Asia300

Malaysia Airports to sell stake in Indian airport operator

Sale expected to add $65.6 million to 2018 earnings

To capture traffic growth, Malaysia Airports Holdings will need to expand capacity at Kuala Lumpur International Airport.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysia Airports Holdings said Friday it plans to sell its entire 11% stake in GMR Hyderabad International Airport, the operator of Rajiv Gandhi International Airport in India, for $76.05 million in cash.

If successful, the sale to GMR Airports is estimated to yield a gain of 255.14 million ringgit ($65.6 million), or an increase of 0.1538 ringgit in earnings per share, for the year ending Dec. 31, Malaysia Airports said. GMR Airports, a unit of GMR Infrastructure, currently holds 63% in GMR Hyderabad.

"The proposed disposal provides an opportunity for the MAHB Group to unlock its investment at an attractive value," Malaysia Airports said. Based on the investment made in 2002, the total cost of investment for the 11% stake is about 40.2 million ringgit, the company said.

Malaysia Airports primarily runs the Southeast Asian nation's main gateway Kuala Lumpur International Airport and the adjacent klia2, base of the region's largest budget airline by fleet, AirAsia. The company also operates over three dozen smaller airports in the country.

The company had sold its stakes in some of its airports abroad or stopped managing foreign projects. In 2015, it disposed its holdings in India's Indira Gandhi International Airport and was forced out of the Ibrahim Nasir International Airport after it was nationalized by the Government of Maldives in 2012.

The latest disposal is part of "portfolio rebalancing strategy," Malaysia Airports said. Proceeds have been earmarked for general corporate purposes and expenses related to the proposed disposal, it said.

GMR Hyderabad has a 30-year concession to operate and manage the Rajiv Gandhi Airport until Mar. 23, 2038 with an option to extend the term for an additional 30 years, which has already been exercised.

Malaysia Airports still owns Istanbul Sabiha Gokcen International Airport but was in talks with potential partners for the Turkish airport, Managing Director Badlisham Ghazali said on Jan. 5. ISG could return to profit this year but "it's always good to have partners" for foreign business, he said.

In the next three years, Malaysia Airports Holdings planned to raise spending by about 30% annually to maintain and upgrade some of its overcrowded terminals. To capture traffic growth, the company will need to expand capacity at Kuala Lumpur International Airport and other select terminals.

Shares of Malaysia Airports rose 1.4% to 9.18 ringgit ahead of the announcement of the stake sale, while the benchmark FTSE Bursa Malaysia KLCI ended inched up 0.1% on Friday.

--Jason Ng

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