Saturday, July 17, 2021

Race hots up for purchase of beleaguered Air India as deadline to submit financial bid nears

As the deadline to submit financial bids to take over cash-strapped Air India nears, the race between rivals has become more intense. After the consortium of Air India employees, backed by NRI businessman Laxmi Prasad, and his New York-based Interups Fund was disqualified, the Tata Group and SpiceJet have been left in the race to buy the national carrier.

The civil aviation ministry is under the charge of new minister Jyotiraditya Scindia, and disinvestment of debt-ridden Air India is one of his key projects. The deadline to submit the bids is the third week of August.

While the Tata Sons, one of the main contenders in the race, has expedited its due diligence process, low cost carrier SpiceJet has also opened its wings for the much-awaited bid. Ajay Singh, the promoter of SpiceJet is learnt to have arranged a $1-billion war chest for Air India bid through a special purpose vehicle (SPV) which is likely to include two US-based funds. 

According to industry insiders, Ajay Singh may hold a minimum 26 per cent shareholding in the SPV, while the US funds are expected to shell out around $700 million. It is going to be Ajay Singh's contribution to the SPV, which will eventually bid for the government’s 100 per cent stake in the national carrier. He is expected to pare his stake in the airline’s cargo unit’s offer for sale once it is listed.

On the other side, Tata Sons Ltd. that owns 84 per cent stake in AirAsia India and controls Jaguar Land Rover, is also getting ready with its bid. The company is learnt to have recently roped in Bain and Company and Seabury Group to carry out due diligence before finalising the bid.

With an aim to facilitate and coordinate with prospective buyers, Air India has set up a 'divestment cell' as well. The cell is making arrangement for buyers visits to the operational sites of the national carrier.

The disinvestment of Air India has been delayed due to second wave of the pandemic, but the government is hopeful of completing the process by the end of this year. Air India has a debt of Rs 60,000 crore which is likely to be parked in an asset holding company owned by the government. The national carrier's stake in Air India Express and 50 per cent stake in cargo and ground handling venture with Singapore’s SATS are also part of the sale.

16/07/21 Pradip R Sagar/The Week

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