KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) intends to sell its entire 10% stake in Delhi International Airport Pte Ltd (DIAL), the operator of India’s Indira Gandhi International Airport (Delhi Airport), for US$79 million (RM292.6 million).

MAHB, in a filing with Bursa Malaysia yesterday, said it is selling the stake because foreign ownership of domestic companies in India is limited to 49%, thus it cannot exercise any control over the management of the company.

MAHB (fundamental: 1.15; valuation: 1.8) said its wholly-owned subsidiary Malaysia Airports (Mauritius) Pte Ltd (MAM) had entered into a conditional share sale agreement with GMR Airports Ltd, a unit of India-listed GMR Infrastructure Ltd, for the disposal.

MAHB said its original cost of investment for the DIAL stake was US$57.62 million.

Barring unforeseen circumstances and subject to all required approvals being obtained, the proposed disposal is expected to be completed in the second quarter of 2015, said MAHB.

The group explained that this is a strategic opportunity to crystallise its investment after realising the investment value.

“MAHB has recently realigned its investment objectives to focus more on investments in companies which it can exercise a significant degree of control over operational decision-making. 

“As the existing shareholders’ agreement restricts foreign ownership in DIAL to not more 49%, MAHB is of the opinion that it would not be in a position to exert influence in DIAL,” it added. 

Subsequent to the disposal, MAHB plans to utilise 92.4% of the proceeds as redemption of debentures within three months; 7.4% as general working capital, and the remainder 0.2% as expenses for the exercise.

MAHB fell one sen or 0.14% to close at RM7.04 yesterday, with a market capitalisation of RM11.63 billion.

This article first appeared in The Edge Financial Daily, on March 25, 2015.