Indian budget carrier SpiceJet Ltd. plans to sell shares in its logistics business in an initial public offering, as the rise of e-commerce drives demand for fast shipping across the region.
The one-year-old cargo division, known as SpiceXpress, could be listed on a stock exchange within 12 months, SpiceJet chairman Ajay Singh said in an interview at Bloomberg’s New York headquarters on Tuesday. The business would continue to be owned by SpiceJet, he said.
“We have a country of 1.3 billion people, one of the fastest-growing economies in the world, and we have very few air logistics players," he said. “We think that there’s a good space for us."
The no-frills carrier is expanding its nascent cargo-hauling arm to fill the growing need for overnight shipping services, fueled by online retailers such as Amazon.com Inc. and Walmart Inc.’s Flipkart. India is under-served at the moment, Singh said, with just SpiceXpress and Blue Dart Express Ltd. as the country’s major shippers.
SpiceXpress has four freighters and expects to receive another six by the end of the year, Singh said. That comes as parent SpiceJet adds new commercial jetliners to its fleet to support growth in the main business of passenger air travel.
SpiceJet started a dedicated freighter business last year, aiming to ship everything from electronics and food to clothes and letters. A cargo business provides some sort of a cushion in a cut-throat Indian market, where passenger fares are often not enough to cover costs.
E-commerce sales in India may more than double to $72 billion by 2022 from $32.7 billion in 2018, research firm eMarketer estimates. Amazon is aiming to dominate the last sizable market yet to be conquered by large networks of hypermarkets and supermarkets, pitting it against Walmart and the planned e-commerce venture of Mukesh Ambani, Asia’s richest man.
SpiceXpress currently flies to Hong Kong from Delhi, Kolkata and the Northeastern city of Guwahati, and operates domestic cargo flights to Hyderabad, Delhi, Mumbai, Bengaluru and Chennai.