Key Points of GMR Group & ADP Collaboration:
- GMR Group is partnering with Groupe ADP to upgrade the retail experience at its airports worldwide.
- The aim of the partnership is to boost non-aeronautical revenue at airports and keep Indian consumers shopping in Indian airports.
- Groupe ADP’s expertise in design will be used to create the next generation of retail at airports.
- GMR Group is looking to develop an airport management vertical to bid for master concessions and real estate development at various airports.
- The partnership is expected to help GMR attract top brands at competitive rates.
- GMR won a bid for duty-free business in Bali, Indonesia, in 2020 as part of its non-aeronautical business development.
- GMR Airports will merge with the group holding company GMR Airports Infrastructure in March 2023.
- The merger will help GMR Group raise funds of INR 2,900 crore ($387 million) from Groupe ADP through a 10-year foreign currency convertible bond, which will be used to repay debt.
Details of GMR Group & ADP Collaboration:
GMR Group, India’s largest domestic private airport operator, is partnering with its French partner, Groupe ADP, to upgrade the retail experience at its airports worldwide. The move is aimed at boosting non-aeronautical revenue at airports such as Delhi, which cross-subsidizes airport charges with 30% of its non-aeronautical revenue. The two companies plan to leverage Groupe ADP’s expertise in design to create the next generation of retail at airports, with the aim of keeping Indian consumers shopping in Indian airports rather than at outstation hubs.
“We want to harness their expertise in attracting the best brands to GMR airports, housed in newly designed retail areas. Imagine their negotiating power to attract global brands. Our (relationship with ADP) is not a financial relationship. It is an industrial partnership,” said Executive Officer Saurabh Chawla in a recent interview.
In addition, the GMR Group is looking to develop an airport management vertical to bid for master concessions (airport operations) and real estate development at various airports. This broad strategy is in line with other airport operators such as Adani Group and the Airports Authority of India (AAI), both of which are also exploring the real estate and aero cities around their airports.
The partnership with Groupe ADP is expected to help GMR attract top brands at competitive rates. In 2020, GMR won a bid for duty-free business in Bali, Indonesia, as part of its non-aeronautical business development.
In March 2023, GMR Airports will merge with the group holding company GMR Airports Infrastructure, in which GMR Group will continue to be the largest stakeholder with a 33.7% stake, while Groupe ADP and the public will hold 32.3% and 34%, respectively. This merger is expected to create a value of 15-20%, with the closer operational assets to the listed company resulting in a higher valuation.
The merger will also help the company raise funds of INR 2,900 crore ($387 million) from Groupe ADP through a 10-year foreign currency convertible bond, which will be used to repay debt. The debt of GMR Infrastructure Ltd. is approximately INR 2,200 crore ($294 million), including accrued interest. Out of the surplus INR 700 crore ($93 million) from the bond, together with INR 550 crore ($73 million) of total earnings, INR 1,250 crore ($167 million) will be used to remove a major portion of the contingent liabilities, according to Chawla.
About GMR Group:
GMR Group is a New Delhi-based multinational conglomerate that was established in 1978 by Grandhi Mallikarjuna Rao. It consists of various entities, including GMR Infrastructure, GMR Energy, GMR Airports, and GMR Enterprises.
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