InterGlobe Aviation, which operates low-cost carrier IndiGo Airlines, is expected to launch its initial public offering (IPO) later this month
InterGlobe Aviation, which operates low-cost carrier IndiGo Airlines, is expected to launch its initial public offering (IPO) later this month, with October 26-28 as the most likely date, three people familiar with the development told FE.
Sources said the price band is being finalised, but largely settled-upon, based on feedback from investor roadshows held on three continents last month. The company is also mulling a 3-5% discount to retail investors but a final decision along with the minimum bid size will be taken in 7-10 days, one of the sources said.
The promoters and existing shareholders will offload a 15% stake to raise Rs 3,200-3,300 crore ($490-500 million based on current exchange rates). The issues comprises fresh stock worth Rs 1,272 crore, based on the information published in the regulatory filing. In addition, existing shareholders will look to sell 3.01 crore shares worth an estimated Rs 1,900-2,000 crore, sources said.
The primary market deal will value the company at around Rs 21,000-21,500 crore, about six times that of rival Jet Airways, according to data available with the stock exchanges.
InterGlobe’s IPO will be the biggest primary market offering since Bharti Infratel’s Rs 4,100-crore-plus public issue in December 2012, statistics compiled by Prime Database showed. The company filed its preliminary prospectus with the Securities and Exchange Board of India on June 30 and received regulatory clearance on September 11.
InterGlobe’s share sale is also the first by an Indian airline since the 2006 listing of Deccan Aviation, later taken over by Kingfisher Airlines. Jet Airways, then India’s largest private airline, raised Rs 1,900 crore in February 2005.
The privately-held IndiGo is one of the two domestic carriers that makes a profit, the other being GoAir. Its net profit for FY15 grew around four times to Rs 1,304 crore driven by low fuel costs, passenger growth and better yields. It reported a net profit of Rs 473.32 crore for FY14. Revenue in FY15 rose 18% to Rs 13,925 crore.
InterGlobe has appointed Citigroup Global Markets, JPMorgan and Morgan Stanley as global co-coordinators and book running lead managers, and Barclays, Kotak Investment Banking and UBS as book running lead managers.
IndiGo was founded in 2006 by entrepreneur Rahul Bhatia and Rakesh Gangwal, a former chief executive of US Airways. The airline has used its low-cost model to stay profitable and become India’s largest airline in a market enjoying double-digit growth in passenger numbers where most carriers lose money because of tough competition and high costs. The airline, which flies a single family of narrow-body planes, flies one in three of India’s air travellers.
A couple of months ago, IndiGo placed an order for 250 Airbus A320neo jets — the largest ever single order for Airbus aircraft by number of jets — as part of its bid to capture a bigger slice of India’s fast-growing aviation market. The order, though not yet finalised, is expected to be completed before the end of this year. The carrier has already placed firm orders for a total of 280 Airbus A320-family jets, of which it has taken delivery of 100.
The airline plans to expand its fleet size to 111 and 137 aircraft by the end of FY16 and FY18, respectively.