SpiceJet looks to rope in new investor as Istithmar exits

Mumbai: Gurgaon-based low-cost carrier SpiceJet has appointed the investment banking arm of financial services company Edelweiss to find a strategic investor for the airline, which is looking to raise between $50-75 million for fleet acquisition and expansion plans.
Three people familiar with SpiceJet’s fund-raising plans said the low-cost carrier is in talks with south-based media baron and Sun TV promoter Kalanithi Maran. ET had earlier reported that Mr Maran was interested in buying into Star Aviation, a yet to be launched regional carrier for southern India. On Friday, we could not reach Mr Maran for a comment.
“We need funds for future growth and expansion and would be exploring all options to raise the money. Edelweiss has been mandated to find investors for us,” SpiceJet CEO Sanjay Aggarwal told ET on Friday. Mr Aggarwal said he would not be able to comment on specific investors.
The development comes close on the heels of the exit of one of SpiceJet’s anchor investors — Dubai-based investment firm Istithmar, which on Friday sold a 13% stake for Rs 160 crore.
Analysts said SpiceJet, since its inception, has been struggling to find a stable promoter with a large holding. This has resulted in financial investors trading the stock as and when the market offered good value.
“The reason why foreign investors find it difficult to hold onto stocks like SpiceJet is simply because they feel they have been blocked because of the FDI cap. Also, in SpiceJet, where there is already an existing foreign investor Wilbur Ross, other foreign investors have little play,” said Jayesh Desai, national director, Ernst & Young.
06/02/10 Manisha Singhal/Economic Times

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Categories: spicejet Feb 2010