Family-controlled Indian infrastructure company GVK Group, chaired by GV Krishna Reddy, is to acquire a majority stake in a company owned by Australia’s richest person, Gina Rinehart.
Reddy and his family, estimated to be worth more than $1 billion (€733 million) according to Forbes, are buying a 79% stake in Hancock Coal and Infrastructure, a subsidiary of the Rinehart family business Hancock Prospecting.
The move by GVK Group comes as Reddy looks to take advantage of Hancock’s large coal stock to meet India’s rising manufacturing needs. GVK, which runs airports and builds power plants and highways in the country, will buy the stake for around $1.25 billion, said a company statement. The remaining stake will be retained by Rinehart.
Secunderabad-based GVK Group plans to fund the acquisition, to be completed in 2012, by two means – selling its majority stake in a Singapore-based coal development unit, and through bank loans. Rinehart's daughter, Georgina Hope Rinehart, will be appointed a non-executive director of GVK's infrastructure business.
Founded by 74-year-old Reddy, the family owns majority of the company, which includes airports, transport, energy and hotel operations. The company’s flagship infrastructure division has an asset base of around $5.25 billion. Reddy is managing director and chairman of GVK Group, and works along side his wife Indira, who is a director, and son Sanjay, who is vice-chairman of the business.
"While this builds a strong resource business for GVK, it will also significantly enhance the value to shareholders as we will now be able to increase the capacity of our coal power business with an assured in house supply of raw material," Reddy said in a statement.
Besides increasing GVK's coal reserves, the deal will also likely add a large sum to Gina Rinehart’s fortunes, as she is sole owner of Hancock Prospecting, founded by her late father Lang Hancock. She is currently estimated to be worth around $9 billion, according to Forbes.
Rinehart, who could become the world’s richest person over the next few years according to research by Citigroup, recently hit headlines for her involvement in a legal tangle with her four children, including two who work in the family business.