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TRANSCRIPT
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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
HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
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
HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
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$270 Mn covering debt, equity invested in the project alongwith a return of 17% and also termination payments andlegal costs
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Mactan Cebu International Airport
HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
BIDDINGCRETE
Cebu airport was a closely won bid by a margin of less than 3%. Delivery on revenue and profitability has been better than bid assumptions.
Overview
Key Features
• In 2014, GMR-Megawide Consortium won bid bypaying a total upfront bid amount of US$ 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
HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
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
HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
BIDDINGCRETE
9HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
BIDDINGCRETE
Local Regulations & PPP Laws
Robustness of PPP laws & regulation Local legal framework Sustainability of concession terms
10HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
BIDDINGCRETE
Regulatory Mechanism
Predictability & consistency Transparency Appeal process Case laws of past Exprerience of existing players
11HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
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
12HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
BIDDINGCRETE
Macroeconomic Factors
Demographic profile GDP growth and its drivers Fiscal imbalance Tax Rate Per capita numbers Sector thrust Exchange rate stability
13HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
BIDDINGCRETE
Revenue and Growth Potential
Sector Analysis and its growth driver Risk of variability to revenue Long term viability
14HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
BIDDINGCRETE
Strong Local Partner
Ability to manage local issues Partner due diligence Strength vs needs Consortium structure
15HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
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
16HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
BIDDINGCRETE
Construction Ability
Strength of local construction companies Construction cost Quality of local construction and track record of delivering on time
17HISTORY ISTAMBUL MALE CEBUINTERNATIONAL
BIDDINGCRETE
Manpower Factor
General labor environment Availability of skilled manpower Track record of labor unrest
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