London-based Bhupendra (Bhulo) Kansagra has played a key role in the growth of India?s private airlines sector, as promoter of low-cost carrier SpiceJet. Kansagra, who has interests in a clutch of businesses ranging from mining to farming spread across Africa, Europe and Asia, last week announced his decision to sell his 12.89% stake in SpiceJet to Sun Network promoter Kalanidhi Maran. The NRI businessman, who flew to India a week back to clinch the deal, spoke exclusively to Nirbhay Kumar of FE on the transaction.
You nurtured SpiceJet. You are credited with taking the airline from a small non-scheduled carrier to the country?s second biggest low-cost airline. Why did you decide to exit the company?
I believe Kalanidhi Maran was very keen to enter the aviation sector. The airline needed a strategic investor with a long-term and strategic interest. In the past, we managed to bring Istithmar PJSC and the private equity fund WL Ross &Co. They were purely financial investors. Aviation is a very capital- incentive sector. We (Royal Holding Services) as a promoter of the airline did not have the potential capacity to invest the kind of money the airline required for expansion. I?m sure Maran would bring great value to the airline.
So Wilbur Ross and you have completely exited the company?
We along with Wilbur Ross have signed the agreement to sell our entire stake to Maran. As per the agreement, we would get Rs 47.25 per share. The process would take some time to complete. It was a fairly complicated deal and such deals takes time to close.
Would you continue to be on the board of the airline?
Yes, I am going to continue on the board of SpiceJet. I have spent 11 years in the airline business. This may be the reason for Maran to retain me on the Board. Frankly, it?s very difficult to guess why Maran wants to keep me as part of the board. Maybe my white hair or no hair ….(laughs).
It?s generally believed that SpiceJet has been valued on lower side compared to its rival IndiGo which has almost similar fleet, market share and operation.
When you go to buy a trouser you pay a price. You pay the price because you yourself agreed to pay. Nobody forced you. That is the fair value. We are happy with the transaction which we, Ross and Maran agreed to and everybody is happy.
The negotiations with Maran took quite some time, what was the single most crucial matter which took so much time to seal?
Nothing held the deal. It was a big transaction. There were lot of complications. It takes time. It involved a lot of issues. There were various aspects including structuring and legal. It would take some time to get the deal completed. It requires a lot of paperwork. Since aviation is the focus of media there has been all kinds of reports getting leaked and these leaks do not help the corporate fraternity.
What?s your take on Indian aviation sector?
I think the growth in Indian aviation sector will be tremendous. It will be directly linked with the country?s gross domestic product (GDP). The growth will be very positive in the low-cost space. The future is in low-cost airline. You just need to see what carriers like Jet airways and Kingfisher are doing to see where the future lies.