capa advisory summit on indian airports€¦ · capa advisory summit on indian airports february...

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CAPA Advisory Summit on Indian AirportsFebruary 2019

Bidding and Developing Airports in a Global Context

Sidharath Kapur,Executive Director

GMR Airports Limited (GAL)

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Table of Content

2Key Considerations for

International Bidding

• Istanbul Airport

• Male Airport

• Cebu Airport

• Crete Airport

1History and Evolution

of GMR Airports

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GMR Airports – History & Milestones

HISTORY ISTAMBUL MALE CEBUINTERNATIONAL

BIDDINGCRETE

Signing of concession agreement for Hyderabad

airport

Construction began in September 2005, and was completed in 31 months

Completed T3, T1D and new runway at Delhi airport

Commenced operations at Malé Airport

Takeover and signing of the

Concession for Mactan-Cebu Airport Project in Philippines

Divestment of Istanbul Sabiha

Gökçen Airport

Arbitration Panel decision in favor of GMR against wrongful

termination of Malé Airport contract

Issuance of GHIAL US$ bond

Issuance of 2nd DIAL US$ bond

Won GGIAL airport, Goa, Aug’16

Won Crete airport Greece, Jun’17

Won EPC bid for Clark, Dec’17Received US$ 271m for Male

airport

Commenced operation of the new airport in

Hyderabad

Commenced operations & development of

Istanbul Sabiha GökçenAirport

Malé Airport concession terminated by

Government of Maldives (politically motivated

decision)

Acquisition of additional 10% stake in DIAL from

Malaysia Airports

Successful issuance of DIAL US$ bond

Emerged as highest bidder for development & operations of Nagpur

airport

Cebu Airport Terminal 2 became operational

Commenced operations, management and

development of Delhi Airport

2004 2010 2014 2016-17

2006 20082012-

132015 2018

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Istanbul Sabiha Gokcen International Airport


BIDDINGCRETE

Super-fast project execution to deliver a total capacity of 25Mn passengers within just 18-months and then exiting at opportune time

Overview

Key Features

• GMR entered operations and development of theairport in 2008

• 2nd busiest airport in Turkey• A major hub for connecting Europe & Middle-East• GMR exited in 2013 with 3x returns• Traffic of ~23mn when GMR exited in 2013.

• First overseas project for GMR Group and anyIndian airport developer

• Consortium: GMR (40%), MAHB (20%) & LimakHoldings (20%)

• Operating rights for 20 years• Total capital expenditure at Euro 451 Mn• Expansion from 5 Mn passenger to 25 Mn• Aprons 45 + 11 (Cargo)• Cargo terminal of 7,950 sqm

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Male Airport


BIDDINGCRETE

The experience gave a learning of handling political risk and also complexities of an international arbitration.

Overview

Key Features

• The airport is located on Hulhule island in the North MaleAtoll

• The Male airport is the primary airport for Maldives• It is the only international airport and connects to the rest

of the world• Traffic of ~2.9 mn when concession was annulled in 2012.

• GMIAL had entered into a Concession Agreement withGovernment of Maldives (GoM) and Maldives AirportCompany Limited (MACL) for modernization and operationof Ibrahim Nasir International Airport (INIA) in 2010.

• Total expected capital expenditure was $511 Mn• However, the Concession Agreement was wrongfully

repudiated by GoM and MACL on 29th November 2012alleging that the same was void ab initio.

• Subsequently, GMR filed an international arbitration againstGoM and MACL for wrongful repudiation

• In 2016 GMR won the arbitration with a compensation of US$270 Mn covering debt, equity invested in the project alongwith a return of 17% and also termination payments andlegal costs

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Mactan Cebu International Airport


BIDDINGCRETE

Cebu airport was a closely won bid by a margin of less than 3%. Delivery on revenue and profitability has been better than bid assumptions.

Overview

Key Features

• In 2014, GMR-Megawide Consortium won bid bypaying a total upfront bid amount of US$ 365 mn

• 2nd busiest airport in Philippines• Named “APAC Regional Airport of the year” by

CAPA• Fastest growing airport in country – ~12%

growth in 2018. Vital International gateway tocountry’s economic prosperity

• Conceptualized as a resort terminal in line withCebu’s positioning as resort island

• Concession Period: 25 years• 11 acres of land for commercial development• Consortium: Megawide (60.0%) and GMR

Airports Limited (40%). GMR held 40% as UnderPhilippine law, a maximum of 40% foreignownership is allowed in public utility companies

• With addition of Terminal 2, MCIA’s passengerhandling capacity has increased to 12.5 MPPA

• Renovation of T1; New floor area of ~7,800 sqm• Total capital expenditure of USD 375 mn

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Heraklion Greenfield International Airport, Crete


BIDDINGCRETE

Greece is first foray by GMR group in European Union

Overview

Key Features

• GMR along with its local partner Terns SA wonthe new Heraklion airport concession in 2016.

• Crete is the second largest International touristdestination in Greece after its capital Athens

• The passenger traffic is ~7.5 Million passengersper annum commanding 17% of the totalInternational Traffic into Greece in 2017

• The scope of the project includes Design,Construction, Finance, Operation, andMaintenance of the Airport

• Concession period: 35 years; First Phaseconstruction to be carried out in 60 months

• Appx. 100 acres of land for commercialdevelopment

• Consortium: TERNA S.A. (60%) and GMR AirportsLimited (40%) of private consortium

• GMR is the designated airport operator• Expected Initial Capex of ~€520Mn• First Phase Capacity: ~15 Mn pax

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Key Considerations for

International Bidding


BIDDINGCRETE

9HISTORY ISTAMBUL MALE CEBUINTERNATIONAL

BIDDINGCRETE

Local Regulations & PPP Laws

Robustness of PPP laws & regulation Local legal framework Sustainability of concession terms


BIDDINGCRETE

Regulatory Mechanism

Predictability & consistency Transparency Appeal process Case laws of past Exprerience of existing players


BIDDINGCRETE

Political Risk

Internal Conflict Track Record of stable govt. and institutional Structure Track record of PPPs Corruption Index Relations with home country Track record of renegotiations Political Risk Insurance


BIDDINGCRETE

Macroeconomic Factors

Demographic profile GDP growth and its drivers Fiscal imbalance Tax Rate Per capita numbers Sector thrust Exchange rate stability


BIDDINGCRETE

Revenue and Growth Potential

Sector Analysis and its growth driver Risk of variability to revenue Long term viability


BIDDINGCRETE

Strong Local Partner

Ability to manage local issues Partner due diligence Strength vs needs Consortium structure


BIDDINGCRETE

Financing

How much equity risk to take Multilateral participation Currency risk Cost of equity Depth of local lenders Assessment of concession document for bankability


BIDDINGCRETE

Construction Ability

Strength of local construction companies Construction cost Quality of local construction and track record of delivering on time


BIDDINGCRETE

Manpower Factor

General labor environment Availability of skilled manpower Track record of labor unrest

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THANK YOU

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