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Abu Dhabi, UAEMonday 17 December 2018

Hyderabad airport raises $350m on international bond markets

India requires up to $45 billion of capital to create additional airports capacity by 2030

The world’s largest aircraft, the AN-225 Mriya, at Rajiv Gandhi International airport in Hyderabad. The airport operator has raised $350m. Noah Seelam / AFP
The world’s largest aircraft, the AN-225 Mriya, at Rajiv Gandhi International airport in Hyderabad. The airport operator has raised $350m. Noah Seelam / AFP

Hyderabad's international airport has raised US$350 million in the international bond markets as India aims to boost investment into its aviation infrastructure amid a need to boost capacity.

Sidharath Kapur, the president of GMR Airports, which owns and operates the airport in south India, said it was a refection “of the Indian growth story”.

“[The offer] saw global investment interest from high quality investors in Asia, Europe and USA and was oversubscribed multiple times,” he said.

India has one of the world's fastest-growing aviation markets. The number of passengers travelling by air within India last year surged by 23 per cent over the previous year to reach close to 100 million.

India requires up to $45 billion of capital to create additional airports capacity by 2030, according to the aviation consultancy firm Capa.

“The airport system is expected to exceed its maximum structural capacity by 2022,” Capa said in a report this month. “India will need to build an additional 500 million to 600 million [passenger] capacity by 2030.”

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Mumbai international airport is already close to saturation and is expected to reach its maximum capacity for passengers by 2019. Several other airports in the country, meanwhile, are operating beyond their intended passenger numbers, the report revealed.

It also highlighted that India is likely to face challenges when it comes to allocating the some 200,000 acres of land that would be required to develop 55 new airports by 2030.

The Indian government has eased investment rules in aviation in the country, last year allowing 100 per cent foreign direct investment into airport projects, with aviation infrastructure development one of the priorities for the country as it strives to overhaul its transportation infrastructure.

GMR said its 10-year bonds had a pricing of 4.25 per cent a year

“The offering … reinforces our ability to raise funds from the international bond markets,” said Grandhi Kiran Kumar, the corporate chairman of GMR Group.

This is not the first time the airports company has tapped international markets.

“The GMR Group, through Delhi International Airport, was the first Indian company to issue seven-year and 10-year high yield bonds in the infrastructure space,” said Mr Kumar.

Mr Kapur said “the proceeds of the offering will completely refinance the bank term loans at Hyderabad Airport".