IndiGo appoints BofA, Citi as advisers for proposed QIP2 min read . Updated: 21 Jul 2020, 07:15 AM IST
The QIP could result in a stake dilution of at least 10% for existing shareholders, including the airline’s promoters
IndiGo, the country’s top domestic airline, has hired Citigroup Global Markets and Bank of America (BofA) to advise on its proposed qualified institutional placement (QIP), said two people with direct knowledge of the matter, requesting anonymity.
The final size of the offering estimated at ₹3,000-6,000 crore will depend on the allotment price of the shares, said one of the two people cited above. The QIP could result in a stake dilution of at least 10% for existing shareholders, including the airline’s promoters, the person said.
IndiGo, run by InterGlobe Aviation Ltd, had a market capitalization of ₹37,377.19 crore on Monday, according to BSE data.
“The capital is most likely to be raised through a qualified institutional placement (QIP)," the person cited above said, adding that the discussions are at an early stage.
QIP is a capital-raising tool through which listed companies can sell shares, fully and partly convertible debentures, or any securities, other than warrants that are convertible into equity shares, to qualified institutional buyers.
An Indigo spokesperson said, “We do not comment on market speculation." Citigroup and Bank of America declined to comment.
Airlines globally have been hit by the covid-19 pandemic, and the resulting lockdowns and travel curbs as well as fears of contracting infection, which has dented demand. Indian carriers are staring at a revenue loss of ₹1.3 trillion between fiscal 2020 and 2022 due to the covid-19 pandemic, rating agency Crisil said in a report last week.
IndiGo posted a consolidated net loss of ₹870.81 crore in the March quarter, from a year-ago profit of ₹596 crore. This was due to a surge in cost, amid tepid revenue growth, which was compounded by flight restrictions to international sectors that saw a rise in covid-19 cases.
“Amid the crisis situation, we strive to manage not for profitability or growth but for liquidity," IndiGo’s chief executive Ronojoy Dutta told Mint last month.
“Our focus is on managing our cash balance by reducing costs, maintaining liquidity, exploring alternative sources of revenue and building consumer and employee confidence through a safe and hassle-free flying experience," he said. A senior IndiGo official said on condition of anonymity that the capital raising exercise is in line with CEO Dutta’s announcement during a post earnings call last month.
“The market is still weak though the demand situation has improved since May. It could be a while before recovery to pre-covid level happens. Amid this, the airline’s plans are to reduce costs and maintain liquidity," the person added.