Home / Companies / News /  Gangwal to sell Indigo stake for $250m

MUMBAI/NEW DELHI : Rakesh Gangwal, co-founder of India’s biggest airline, IndiGo, will sell up to a 2.8% stake in Interglobe Aviation Ltd through a block deal that will fetch him at least $250 million, according to deal terms reviewed by Mint.

The selling shareholders include Rakesh Gangwal, Shobha Gangwal and The Chinkerpoo Family Trust, collectively the Rakesh Gangwal promoter group, which owned a 36.6% stake in the airline as of 30 June.

Shares of InterGlobe Aviation will be offered to institutional buyers at a floor price of 1,850 apiece, a discount of 6.5% to the closing price of 1,977 per share on the NSE on Wednesday.

At the floor price, the stake sale will fetch Gangwal promoter group at least 1,996 crore, or $250 million.

Investment banks Morgan Stanley India Co. Pvt. Ltd, Goldman Sachs (India) Securities Pvt. Ltd and J.P. Morgan India Pvt. Ltd are the brokers of the block trade. The block trade will be executed on 8 September.

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InterGlobe Aviation Ltd, which operates IndiGo, was founded by businessman Rahul Bhatia and airline veteran Rakesh Gangwal in 2006.

A dispute between the two founders became public in July 2019 when Gangwal complained to the markets regulator regarding issues related to corporate governance and related-party transactions at IndiGo. The two promoters had also approached the London Court of Arbitration to resolve the dispute, where the final award came on 23 September 2021. The court had given a period of 90 days to enforce the order. Although the details of the award have not been made public, it is believed to have favoured Gangwal.

The feud finally came to an end when the two promoters convened an extraordinary general meeting in December to remove restrictions on the transfer of promoter shares and amend the articles of association. The resolution was passed and thereby cleared the path for the promoters to dilute their stake. Within two months, Gangwal announced his resignation from the IndiGo board on 18 February 2022. He had further announced that he would “slowly" reduce his equity stake in the airline over more than five years to diversify his holdings.

“While new investors should benefit from the potential future growth in the company’s share price, a gradual reduction of my stake should also allow me to benefit from some of the upside. Like any plan, future events may impact my current thinking," Gangwal had said on 18 February, adding that he shall consider participating as a board member again in the future.

According to July data from the Directorate General of Civil Aviation, IndiGo is the largest airline in India, with a market share of 58.8%. The airline recently posted a second straight quarter of losses at 1,064 crore despite its strongest revenue performance in a quarter at 13,019 crore. With a fleet of over 275 aircraft, IndiGo currently operates around 1,600 daily flights to 74 domestic and 26 international destinations.

As of June, Bhatia’s InterGlobe Enterprises held a 37.83% stake in the airline, while Rakesh Gangwal Group, comprising Rakesh Gangwal, Shobha Gangwal, and Chinkerpoo Family Trust, owned 36.6%. Gangwal group’s stake is worth 27,972.68 crore based on IndiGo’s closing stock price on Wednesday.

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ABOUT THE AUTHOR

Swaraj Singh Dhanjal

" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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