About half a dozen fund houses have submitted proposals for a possible investment in India’s second largest low-fare carrier SpiceJet Ltd. The proposals, also known as term sheets, come at a time when some of the airline’s investors are looking to exit their investment, said two persons with knowledge of the development. The Gurgaon-based airline, which is listed on the stock exchanges, is currently holding road shows to raise $75 million (Rs332.3 crore) by selling new shares ahead of launching international flights. “Including two very big financial investors, the airline has received good response for proposals for potential investment. More players may submit their term sheets in the coming days,” one of the executives said on condition of anonymity. The airline’s fund-raising coincides with some of its strategic investors separately talking to Indian companies and financial institutions to exit from the airline. “The airline in its capacity is talking to potential investors, but at the same time several investors are talking to various companies and financial institutions at their own level. But nothing has been finalized as yet,” the second executive said. In early February, the Dubai government’s investment arm Istithmar PJSC, which was an anchor investor in SpiceJet, sold bulk of its 13.39% stake to a clutch of domestic funds that included DWS Invest BRIC Plus Fund, Reliance Mutual Fund and Birla Mutual Fund.
The stake sale came at a time when the airline had mandated IDFC- SSKI Securities Ltd and Edelweiss Capital Ltd to find new investors for a fresh round of fund-raising. SpiceJet’s chief executive officer Sanjay Aggarwal was not available for comment and a spokesperson declined to do so. Tata group holds around 6% while Wilbur L. Ross, who specializes in investing in and restructuring distressed firms, holds 32% equity. Ross injected $80 million into SpiceJet in July 2008 through his eponymous private equity fund and persuaded investment bank Goldman Sachs to invest $20 million at the same time. According to the second executive quoted earlier, Ross, as well as UK-based Bhupendra Kansagra, who holds equity in SpiceJet through Royal Holding Services Ltd, and a few others are looking to exit the carrier. However, Kansagra denied any such move, saying he plans to remain invested with the airline.
“I have stayed invested for a decade now, I am not selling,” he told Mint. “In the case of fund-raising, we are going ahead with the programme and I cannot comment on the details,” added Kansagra, whose shareholding is currently at 12.89%. The India representative of WL Ross and Co. declined to comment.
The above article was extracted from Skyline updates of Skyline College. Skyline College is amongst the top MBA and BBA institutes in Delhi, Gurgaon (NCR).
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