Wadia Group-owned low-cost carrier GoAir’s initial public offering (IPO) is likely to happen by the end of FY17-18, while the airline is expected to finalise the global co-coordinators in the next three months.
Major domestic investment firms like SBI caps, Kotak Mahindra, Edelweiss and Motilal Oswal have pitched in for book-running lead managers for the issue, investment bankers privy to the development told FE. According to them, the timing of the IPO would depend mainly on the macro market conditions.
The company is looking at the stock performance of Indigo Airlines, whose shares underwent a major correction in the last few months due to concerns over delivery of aircraft from Airbus. Although the stock soared more than 80% in first three months of listing to hit a lifetime high of R1,395 in January 2016, it has slumped more than 60% from the peak. On Thursday, shares of IndiGo closed at R880.20 apiece on the BSE — 15% premium to the issue price of R765 apiece.
GoAir — the fifth largest airline in the domestic market — is also looking to raise funds to partially pay for an order for 144 Airbus A320 Neo aircraft that has been placed by the company in two tranches. “Go Air is looking to raise funds to partially pay for the airplanes that they have ordered. This will build the credibility of the airline in front of the potential investors,” said person in the know of the developments. According to sources, the airline might go for a pre-IPO placement to raise funds to partially pay Airbus for the 144 aircraft order.
The carrier recently received the permission to fly on the international routes from the ministry of civil aviation, after it received the delivery of its 20th aircraft two months ago. GoAir has also placed an order of 72 A320 Neo aircraft in order to expand in the next 10 years, in the face of rising competition in the domestic market.
GoAir is also looking at international destinations in countries like Saudi Arabia, where not many of the domestic carriers fly. “They want to ensure that the start of international operations takes place smoothly before the IPO takes place. They also want to show the potential investors that they are serious about the expansion plans and have funds for that. Some of the proceeds from the IPO will be used for paying for the aircraft acquisition,” said the second banker.
In response to an e-mail inquiry, the airline said that as a policy, it does not comment on market speculations. GoAir right has a market share of 8.4%, according to the latest DGCA data in August.