Indian aviation could soon witness the next round of consolidation as Kingfisher Airline's 's move to acquire a stake in low-cost carrier SpiceJet has entered its final phase.
UB Group chief Vijay Mallya is holding talks with SpiceJet's main promoter Bhupendra Kansagra in Europe for buying his 12.91% stake, along with a 13.42% stake held by Dubai-based investment firm Istithmar PJSC. Mallya, who is learnt to be looking for a total of 26%, stake, may have to shell out between Rs 145 to Rs 155 crore for the deal. At current stock prices, the SpiceJet's valuation is over Rs 600 crore. Its share closed at Rs 25 on Friday.
SpiceJet is learnt to be losing up to Rs 70 lakh daily on account of high oil prices and looking for fresh infusion of funds to survive. The airline's attempts to raise $100 million through debt-equity, said sources, would not have yielded much result as getting investors for this loss-making business has become very difficult. All airlines in India are losing huge money, with the big ones like Jet and Air India losing up to Rs 10 crore daily.
The lock-in period of Kansagra and Istithmar ended this February and now they can sell stakes. Kansagra is learnt to be keen on ending his stormy relationship with Indian aviation, which started in 1990s when he bought out ModiLuft from the Modis but a legal battle with the latter made the money remained stuck for nearly three years. Later he started SpiceJet with other investors but with aviation showing no sign of profitability, he is now learnt to be desperate to exit the business without losing any more money. Kansagra is a mega corporate player with interests in fields as varying as hotels, shipping and pharma.
According to sources, Mallya is looking at picking both Kansagra's and Istithmar's stakes. As per rules, picking up over 15% stake would trigger open offer under which he will have to buy 20% more stake from other investors. If this deal comes through, Mallya will become the undisputed market leader of Indian aviation. He is likely to operate the entire empire under brand name of Kingfisher and use Deccan and SpiceJet planes for low cost flights. Mallya will also enter the big league of giants like AI or Jet that operate a both Boeing and Airbus fleet.
GoAir is also in final stages of being either completely bought out or having a substantial stake sold to some other player whose name is still under wraps.
Source: Times of India