Aéroports de Paris and GMR Airports Infrastructure Ltd. agreed to merge their joint venture, giving ADP a liquid stake in an Indian airfield company.
According to a statement issued Sunday by the French company that operates Paris's Charles de Gaulle and Orly airports, ADP and GMR Airports Infrastructure own 49% and 51%, respectively, of the unlisted GMR Airports Ltd.
The merger of GMR Airports Infrastructure and GMR Airports will simplify the unlisted company's capital structure, allowing the combined entity to more easily capture new business, according to the companies.
According to the companies, the merger will take place in the first half of 2024. ADP would own 45.7% of GMR Airports Infrastructure and GMR Airports combined.
“Demand for air travel has picked up substantially, which will speed up airport privatization initiatives of the respective governments across the world," GMR said in a separate statement.
The merged company, “with an improved balance sheet, will be in a much stronger position to further scale up the airport business by judiciously participating in profitable opportunities mainly in India, South Asia, Southeast Asia and Middle East." GMR’s portfolio includes airports in Delhi and Hyderabad.
ADP will invest €331 million ($353 million) in GMR Airports Infrastructure foreign currency convertible bonds, with the proceeds used by the Indian company to clear its balance sheet by repaying corporate debt and settling a significant portion of its liabilities. According to ADP, the investment will result in a cash expense of the same amount in the coming weeks.
The transaction is consistent with ADP's strategy of selective international growth, and the French firm confirmed its target for net financial debt in 2025 of 3.5 to 4.5 times earnings before interest, tax, depreciation, and amortisation. It also confirmed its dividend policy, which calls for a 60% payout ratio on earnings from 2023 to 2025, with a minimum of €3 per share.