WL Ross in talks with Jet, Kingfisher to evaluate merge opportunities for SpiceJet: Report
19 September 2008
Mumbai: Private equity firm WL Ross and Co, which had invested around $80 million in Indian low cost airline SpiceJet, is reported to be talks with Jet Airways and Kingfisher Airlines to evaluate merger possibilities for the carrier, according to a report in the Mint newspaper.
The report said that the idea behind the talks would be to increase the valuation of SpiceJet before WL Ross exits its investment. The investment firm has also recommended more strict cost control and tighter management to turn around SpiceJet, the report said.
The report said that a senior UB Group executive ''confirmed the Ross approach", and said that talks were at a very preliminary stage. UB Group is the holding company for Kingfisher Airlines.
WL Ross had said it would invest $80 million in SpiceJet in July, while investment firm Goldman Sachs was to invest $20 million. The Tata Group owns a strategic six per cent stake, along with Dubai's Istithmar which owns 13.4 per cent in the low cost carrier.
Kingfisher Airlines chairman Vijay Mallya was reported to have made an offer for SpiceJet around the time investment firm WL Ross committed, but the offer was reported to have been rebuffed, with SpiceJet, saying it was open to other offers in the future.
SpiceJet does not expect to breakeven before 2009-10.