Mumbai:
Deccan Aviation Ltd, which runs the no-frills airline
Air Deccan, is close to finalising a $75-$100 million
fund-raising deal with private equity investors, reports
quoting airline sources said.
Deccan Aviation is reported to have approached PE funds
like TPG and Blackstone among others. Edelweiss securities
have been appointed to zero in on the right investor.
While Air Deccan is on an expansion mode and is trying
to connect more cities especially smaller towns, its
low-cost operations are expected to bring in some high-value
investments from private equities (PE).
The equity infusion in funding its expansion and is
also expected to provide Air Deccan with a substantial
war chest to take on competition.
Air Deccan has a market capitalisation of about Rs1,100
crore but valuation could go up smartly.
"We are evaluating multiple options and would finalise
the organisation that best fits our business objectives.
One that helps us in building a great airline and maximising
shareholder value," said Air Deccan spokesperson.
Air Deccan may
dilute 25 per cent of equity to raise this money. With
a fleet size of 43 aircraft and about 60 aircraft on
order it has about 21 per cent of the Indian aviation
market.
Reports, meanwhile,
said the Anil Dhirubhai Ambani group is eying a 26 per
cent stake in Deccan Aviation.
Sources said Air
Deccan was very keen on finding an investor having a
close alignment of vision with the airline on the way
ahead. The airline was also very keen to spin off various
divisions like cargo, MRO (maintenance and overhaul
organisation) and a helicopter charter unit into separate
companies. These would eventually be spun off to unlock
value for the company.
"What we
are trying to see is what kind of money people are willing
to invest and under what kind of conditions," a
report quoted Deccan''s managing director G.R. Gopinath
as saying.
"Edelweiss
has to give the final list of short listed funds, which
should happen within ten days," an earlier report
quoted him as saying.
Edelweiss, which
is handling the deal, said "The transaction is
on and we are drawing up the list, but I can''t disclose
anything more at the moment."
The
Indian carriers are resorting to debt and equity dilution
to compete in a market rife with discounts and falling
airfares. Deccan''s smaller rival SpiceJet had raised
about $65 million from the Tata group and a clutch of
funds.
The shares of
Deccan Aviation were trading 5 per cent up at Rs 114.10.
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