Airports Authority of India IPO weighed down by valuation concerns


IPO Prospects of Airports Authority of India (AAI) – India’s largest airport operator – are muddled amid the challenging task of mapping and valuing its land holding as well as hiving off air traffic and navigation services business. AAI had retained SBI Caps to help it with the IPO listing process.

According to an aviation ministry official, AAI is faced with the daunting task of getting its land mapped and valued besides hiving off air traffic and navigation services business. AAI had earlier this year hired SBI Caps, the investment banking arm of SBI, to help it proceed for listing.

Aviation minister Ashok Gajapathi Raju has stated that government wants divestment in the two state-run airport and helicopter operators. Accordingly, the draft civil aviation policy has listed AAI and Pawan Hans for divestment. Incidentally, IPO prospects of Pawan Hans have also turned bleak following a tussle between the company and finance ministry regarding an old loan which has accumulated interest far larger than the principle amount.

AAI is the country’s largest airport operator which owns and manages 125 airports. The government’s interest in getting Airports Authority of India IPO is understandable as the operator has been profitable. AAI paid a dividend of INR288 crores to the government in FY 2013/14. However, the state-owned enterprise has not been consistent in making money with its airports. Earlier this year, Mahesh Sharma – Minister of State for Civil Aviation – said in the Parliament that AAI’s 92 operational 31 non-operational facilities were making losses. During FY 2013/14, Chennai and Goa were the only profitable airports among AAI’s properties.

Meanwhile, other debt-laden companies in the aviation sector are also looking to benefit from growing risk appetite in India’s IPO market. Important among such players are GVK Airport Developers which operates Mumbai and Bengaluru airports and GMR Group, which counts Delhi International Airport among its projects.

Read Also: GVK to list airport business by December via INR3,500 crore IPO

Another aviation player, though not an airport operator, which is looking to tap the primary market is IndiGo parent InterGlobe Aviation Limited. The company has filed prospectus with SEBI to raise INR2,500 crore through its maiden public issue.


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