InterGlobe Aviation, the entity that owns and operates budget airline IndiGo, aims to raise about Rs 3,200 crore ($500 million) for a 15% stake, two people familiar with the development told FE. That’s the total market value of rival Jet Airways, in which Etihaad owns a 24% stake, and which reported a loss of R1,813 crore in FY15.

The issues comprises fresh stock worth R1,272 crore and an offer for sale (OFS) of 3.01 crore shares worth an estimated Rs 1,930 crore. The primary market deal will value the company at an estimated R21,200 crore, sources said.

The privately-held IndiGo is one of the two domestic carriers that makes a profit, the other being GoAir. IndiGo reported annual net profit of R317 crore for the year to March 2014, a 60% drop over the previous year, although revenues rose 17.5% to R11,117 crore in the same period. In FY13, the no-frills carrier posted a five-fold increase in net profit to R787 crore on revenue of R 9,458 crore.

InterGlobe’s IPO will be the biggest primary market offering since Bharti Infratel’s R4,100 crore-plus public issue in December 2012, statistics compiled by Prime Database showed. The company filed its preliminary prospectus with Sebi on Tuesday for a stock-market listing. The company will utilise the funds towards retirement of certain outstanding lease liabilities and consequent acquisition of aircraft, purchase of ground support equipment and for general corporate purposes.

InterGlobe’s share sale is also the first by an Indian airline since the 2006 listing of Deccan Aviation, which was later taken over by Kingfisher Airlines. Jet Airways, then India’s largest private airline, raised R1,900 crore in February 2005.

According to CAPA, the combined airline losses for India are expected to reach $1.4 billion in the current fiscal year as the structural viability of airline business models will continue to face pressures, for costs are expected to increase while yields are likely to remain soft with new entrants coming into the market. Low-cost carrier SpiceJet, which posted a loss of R687 crore in FY15, has a market value of R1,100 crore.

IndiGo also retained its leadership in the domestic market during May, a month that saw a 9% increase in the number of passengers carried over the previous month with more people opting for air travel during summer holidays.

It clocked a 38.9% market share, carrying 27.69 lakh passengers during the month. The carrier maintained its lead over Jet Airways (18.3%), Air India (15.8%), SpiceJet (11.7%), GoAir (8.6%), JetLite (3.2%), AirAsia India (1.3%), Vistara (1.3%), Air Costa (0.9%) and Air Pegasus (0.1%).

Mega primary market offer

The issues comprises fresh  stock worth Rs 1,272 cr and an offer for sale (OFS) of 3.01 cr shares worth an estimated R1,930 cr.

The deal will value the company at an estimated Rs 21,200 crore.

This will be the biggest primary market offering since Bharti Infratel’s R4,100 crore-plus public issue in December 2012