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Sebi temporarily halts GoFirst IPO due to pending enquiry against Bombay Dyeing

Go First had filed preliminary papers for an initial share sale worth  ₹3,600 crore in MayPremium
Go First had filed preliminary papers for an initial share sale worth 3,600 crore in May

  • GoAir, now christened GoFirst has been flying for more than 15 years ago. It plans to raise 3,600 crore through issuance of fresh equity shares
  • The Wadia group owns a 73.33% stake in the carrier while the remaining shareholding is with other entities, including Baymanco Investments Ltd

Markets regulator Sebi has temporarily suspended the initial public offering (IPO) of GoAir, now christened GoFirst due to a pending enquiry against Bombay Dyeing Manufacturing Company Ltd and its promoters, the Wadias.

Go First had filed preliminary papers for an initial share sale worth 3,600 crore in May. The proceeds will be mainly used to repay dues.

According to the latest statement by the Securities and Exchange Board of India (Sebi), "issuance of observations (has been) kept in abeyance", on the processing status of Go Airlines' draft offer documents. The information was updated on June 25.

In Sebi parlance, the issuance of observations implies its go-ahead for the IPO.

Normally, Sebi gives its observations on IPO papers in 30 days.

In cases where Sebi feels there is a possible cause for investigation or investigation is already in progress but no show-cause notice has been issued, Sebi can keep the matter in abeyance for 30 days, which can be extended by further 30 days or till the conclusion of the investigation.

In cases where a show-cause notice has been issued, Sebi can keep the process in abeyance for 90 days and by further 45 days or till the conclusion of the proceedings.

Keeping the processing of Go Airlines' IPO papers in abeyance indicates that the company or the selling shareholders may be subject to some investigation.

On June 11, the regulator had sought clarifications from the offer's Lead Manager. The Coordinating Lead Manager (Pre-Issue) is ICICI Securities Ltd.

Specific details about the reasons for Sebi keeping the issuance of observations in abeyance could not be immediately ascertained.

An airline spokesperson said, "Go Air has received no communication from Sebi."

The airline, which has been flying for more than 15 years ago, plans to raise 3,600 crore through issuance of fresh equity shares. It also plans to raise up to 1,500 crore by way of an pre-IPO placement.

From the net IPO proceeds, the airline plans to pay over 2,015.81 crore towards prepayment or scheduled repayment of all or a portion of certain outstanding borrowings.

An amount of 279.26 crore would be for "replacement of letter of credits, which are issued to certain aircraft lessors towards securing lease rental payments and future maintenance of aircraft, with cash deposit", as per the Draft Red Herring Prospectus (DRHP) filed with Sebi in May.

Also, the airline to make repayment of dues of 254.93 crore to Indian Oil Corporation for fuel supplied to it.

The Wadia group owns a 73.33% stake in the carrier while the remaining shareholding is with other entities, including Baymanco Investments Ltd. The latter holds a 21.05 % stake.

Others are Sea Wind Investment and Trading Company Ltd (3.76% shareholding), Heera Holdings & Leasing Pvt Ltd, Nidhivan Investments & Trading Company Pvt Ltd and Sahara Investments Pvt Ltd -- all the four entities have a 0.62% stake each in the airline.

(With PTI inputs)

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