GVK looks east for growth; to raise funds for Indonesian airport this year

Private airport operator GVK is looking east for growth of its airport business.

The company has finished the feasibility study for its Yogyakarta airport project in Java, Indonesia, which has already been approved by the Indonesian government. GVK is now expected to ready the plan in a few months and begin raising funds later this year.

“The project will be funded through debt and equity, and fund-raising will commence later this year or early next year,” GVK told NDTV.

In January 2011, GVK had signed Memorandum of Understanding (MoU) with the Indonesian government for developing two greenfield airports - one in Yogyakarta and another in North Bali.

The infrastructure company is expected to invest as much as $1.5 to $2 bn in the two projects.

While it is finalizing the location for the Yogyakara airport, the plan for the project in North Bali is still under discussion. According to GVK, the Yogyakara project is expected to generate revenues within the next 5 years by 2017-18.

GVK is slated to build the Yogyakarta airport with Angkasa Pura Airports, the state owned enterprise that manages airports in Indonesia under public-private partnership model. GVK will hold 49 per cent in the venture with the majority of 51 per cent owned by the Indonesian government.

As per the feasibility study, Yogyakarta airport will have a capacity to handle 5 million to 6 million passengers-per-annum. This is just a fraction of the 40 million passengers-per-annum capacity of the integrated terminal of Mumbai International Airport. GVK is expected to complete the terminal in India by the year 2013.

The company sees Indonesia as a growth opportunity with the country’s increasing tourist traffic pushing demand to develop new airports.

Not only in Indonesia, the group is also expanding presence in other countries in the world.

“GVK is open to exploring opportunities in various countries and will assess the same on a case by case basis,” GVK company spokesperson said.

The company also recently increased its stake in Bengaluru International Airport to 43 per cent in line with its strategy to expand its airport business in India.

Shares of GVK have risen 7.62 per cent so far in 2012, outperforming the BSE Sensex index which is up 1.63 per cent.