Thursday, September 30, 2021

Air India disinvestment: Tatas likely frontrunners to win bid as govt sets minimum price for airline

New Delhi: The government has set the minimum reserve price for national carrier Air India’s disinvestment after final bids were submitted by Tata Sons and SpiceJet promoter Ajay Singh earlier this month.

Multiple reports indicated that the government has finalised the minimum reserve price for the national carrier, based on future cash flow projection, brand value and slots in foreign airports.

The reserve price is likely to be in the range of Rs 15,000 crore to Rs 20,000 crore, reported Business Standard. The report indicated that the government expects the final winning bid to at least match the minimum reserve price.

However, the deal could still go ahead if the winning bid is slightly lower than the reserve price.

The report, quoting a person familiar with the proceeding, said valuation firm RBSA Advisors and EY — the consultant for the disinvestment — gave a presentation to the committee of secretaries headed by the cabinet secretary Rajiv Gauba.

After the presentation, the committee met to finalise the reserve price, which will be used a benchmark to compare with the final bids submitted by Tata Sons and Ajay Singh.

Tata Sons is the likely frontrunner to acquire Air India as it is believed to have submitted a higher bid for the debt-laden airline.

Former Air India director Jitendra Bhargava recently told Bloomberg TV that the Tatas are likely to get a nod from the government as they have the capability to pour in a large amount of money required to revamp the national carrier.

“Tatas have been very, very passionate about Air India," Bhargava said.

Meanwhile, a top executive confirmed to The Economic Times that the Tatas have made a high bid for the airline, given the fact that it is a national asset. The salt-to-software conglomerate has also included an indemnity clause in its bid to prevent any unexpected claims that arise later.

The ET report noted that more than 200 Tata Group personnel have been involved in the process, including M&A specialists from units such as Vistara, AirAsia India, Tata Steel and Indian Hotels.

It may be noted that the Tatas are planning to merge all their airline business under one entity if it successfully bids for Air India.

The Tatas have already conducted extensive due diligence involving three teams from AirAsia India, TCS and other external consultants. The group has also formed a separate company Talace Private Limited to participate in the Air India acquisition process.

30/09/21 India Today

To Read the News in full at Source, Click the Headline


Post a Comment