India’s largest private airline Jet Airways is in negotiations with private equity players Blackstone, TPG Capital and Temasek for raising Rs 400-450 crore. The company is raising money for meeting the operational expenses of running the loss-making Air Sahara, which it recently acquired.
Industry sources say while TPG Capital is looking to co-invest along with Singapore-based fund Temasek, Blackstone is looking at clinching the deal alone.
The deal, which would require shareholder approval, will bring fresh equity infusion into the company through a preference share issue. The promoters currently hold 80% stake in the company which will come down proportionately along with the other shareholders’ stake. The private equity investor may take 8-9% stake.
“The only comment we can make at this stage is that no decisions have been taken on the modalities of raising additional capital for Jet Airways and discussions are on with various investment bankers,” said Saroj Datta, ED, Jet Airways. Air Sahara will be renamed JetLite and will be a 100% subsidiary of Jet Airways. “The deal is being structured to dilute stake in the post-merged entity. It is being done under Section 81A of the Companies Act,” an industry source said.
Sources in the industry say the private equity placement is being made to run the operations of the erstwhile Air Sahara. “The operational expenses for Jet are huge since Air Sahara is not very profitable. It is talking to PE players to tide over some of the expenses,” said an industry source.
Temasek India head Manish Kejriwal said, “We do not comment on market speculation.” An email sent to Blackstone did not elicit a response. Jet Airways recently acquired Lucknow-based Air Sahara in a deal valued at Rs 2,300 crore. While Jet had paid Rs 400 crore upfront, it will pay Rs 550 crore in four annual instalments, starting next year.
With the acquisition, Jet Airways can access Air Sahara’s fleet of 27 aircraft and also its market share. As a combined entity, Jet and Sahara will command close to 35% of the Indian skies, according to industry figures.
Jet Airways has a fleet size of 62 aircraft and operates 340 flights daily to 50 destinations, including London, Singapore, Kuala Lumpur, Colombo, Bangkok and Kathmandu.
Source : Economic Times