Friday, December 24, 2021

IndiGo EGM call signals truce among promoters

The extraordinary general meeting (EGM) of InterGlobe Aviation, which operates the county's biggest airline IndiGo , on December 30 will likely signal a truce for its sparring founder-promoters, Rakesh Gangwal and Rahul Bhatia, people aware of the development said. Gangwal and Bhatia have been locked in a bitter feud since 2019 over several clauses in the company's Articles of Association (AoA).

The EGM has been called to amend the AoA, which, among other things, say that if one promoter decides to sell his shares, the other has the right of first refusal to buy them. Also, its promoters need the approval of each other for any sale of shares to a third party.

InterGlobe's shareholders had rejected a similar proposal at its EGM last year, requested by Gangwal. "It's different this time as the EGM has been called at the behest of both founders. This is a clear indication of a truce," said one person who is aware of the development. "While differences surely remain, they have reached some kind of understanding on that clutch of clauses in the agreement," another person said.

A timeline

JULY 8, 2019: Gangwal writes to Sebi, PMO, finmin for intervention

SEPT 4: IndiGo confirms Sebi has sought clarifications

OCT 1:Bhatia moves London Court of International Arbitration (India)

NOV 8:Gangwal seeks rejection of Bhatia’s application; Bhatia reapplies

SEPT 24, 2021: InterGlobe Aviation says arbitral award has come

DEC 30: Extraordinary general meeting called

If the EGM approves the proposal, it will mean that Gangwal can sell his shares without Bhatia's ROFR or nod. Whether he will exit the company and how soon remains to be seen, company insiders said.

Gangwal and family together own 36.61% in the airline. Based on the airline's market capitalization end of day Thursday, his shares are worth ₹27,782 crore.

"There has been speculation throughout this feud about buyers - Qatar Airways, which has always been interested - and others. It has to be an entity with deep pockets, which is more than can be said for most airlines in the world now, especially post Covid-19. It could be a businessman with ambitions in this sector," one of the people said.

Gangwal once steered most big operational decisions at the airline, such as aircraft orders and leasing, as well as maintenance contracts, but he has adopted a hands-off approach over the last few years, except in his role as board member.

24/12/21 Anirban Chowdhury/Economic Times

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