Paramount Airways to buy back 5%

Mumbai: Coimbatore-based business-class airline, Paramount Airways, is in advanced stages of discussion to buy back a 5% stake held in the company. A substantial part of the stake is held by Kotak Mahindra group’s private equity arm, India Growth Fund.
It is gathered that the deal will be announced in a few weeks, according to a source closely involved with the development. Analysts peg Paramount’s valuation at $200 million, placing the 5% holding at $10 million.
“The buyback is likely to be funded through Paramount’s group companies,” said the source. Paramount’s promoters, primarily led by the airline’s managing director M Thiagarajan, hold the remaining 95%. Being a closely-held company, Paramount’s financials are not in the public domain.
India Growth Fund acquired its stake in Paramount in 2005, when the airline launched its commercial services. It is learnt that the airline was valued at around $100 million that time. When contacted, Paramount Airways’ MD declined to comment on a potential deal.
The promoters of Paramount, added the source, has been keen on increasing their holding for a while now and this development is therefore in line with that.
Paramount has a market share of just over 2% on a national basis. According to M Thiagarajan, his airline accounts for a quarter of the total market in the South. This comes on the back of Paramount’s rivals facing mounting losses and reducing the number of services.
Figures released by the Directorate General of Civil Aviation
(DGCA) state that Paramount has reported a 45% increase in passenger traffic in January this year to 71,000 as compared to 49,000 passengers during January 2008. Overall, Paramount operates 1,600 services every month, which is expected to increase to 2,200 by October this year. It caters to destinations like Chennai, Coimbatore, Bangalore, Hyderabad, Goa, Pune and Ahmedabad.
26/02/09 Mithun Roy/Economic Times

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Categories: Paramount Airways Feb 2009