Apollo Global leads race for stake in Hyderabad airport.

Apollo Global Management has emerged as the front runner to buy 30 per cent stake in the GMR Group's Hyderabad International Airport Limited (GHIAL) for Rs. 2,000 crore, amid heightened interest among global investors for infrastructure projects in the country.

Founded by billionaire Leon Black, Apollo Global Management is a $186-billion private equity firm.

Sources aware of the development said last month, debt-laden GMR Infra shortlisted Apollo and Abu Dhabi's sovereign fund Abu Dhabi Investment Authority (ADIA), among five companies that had submitted bids for the stake.

Other bidders included Canadian pension asset manager PSP Investments; Flughafen Zürich, which operates the Zurich airport; and IDFC Alternatives, the private equity firm of IDFC.

Apollo's bid of Rs. 2,000 crore - valuing the project at Rs 6,800 crore - was higher than ADIA's bid (Rs. 1,400 crore). IDFC had submitted a bid of Rs. 550 crore for a minority stake of 10 per cent, valuing the project at Rs. 5,500 crore.

'The company (GMR) needs money to leverage debt and for pumping into new infrastructure projects,' said a source aware of the development. 'Hence, Apollo is being preferred over other bidders who have experience in running an airport.'

Apollo's valuation is at 10 times EV/Ebitda as compared to global average of six to seven times for airport projects. EV/Ebitda is the ratio of enterprise value to earnings before interest tax depreciation and amortisation. GMR has mandated Credit Suisse for the stake sale process. The deal will help GMR Infra to strengthen its balance sheet which has been reeling under debt.

The group's debt stood at about Rs. 45,000 crore by the end of the last financial year.

BS