Air India stake sale: Roadshows likely soon in Singapore and London

Dipam, civil aviation ministry, EY, AI officials to conduct roadshows

Officials from the civil aviation ministry and the Department of Investment and Public Asset Management (Dipam) will later this month visit Singapore and then London to drum up investor interest for national carrier Air India.

In the Singapore leg of the ‘roadshow’, officials are expected to meet the representatives of prospective investors such as Singapore Airlines and its holding company Temasek.

Business Standard has learnt that while the dates and itineraries are still being finalised by transaction advisor EY, the roadshows will happen this month, before the preliminary information memorandum (PIM) to invite expressions of interest (EOIs) is issued by Dipam by the first week of December.

“The aim is to get a better sense of investor interest in the airline and their outlook on the aviation sector in general before the PIM is issued,” a top official said.

It is likely that the Air India Specific Alternative Mechanism (AISAM), a group of ministers headed by Home Minister Amit Shah, will meet only after the roadshows have been conducted. Officials said the next meeting of AISAM would be held to approve the PIM.

As such, one leg of the roadshow has already been conducted in Mumbai on October 29, officials said. It is learnt to have been attended by representatives of some big Indian corporates. A person aware of the development said most of the queries in Mumbai were regarding Air India’s debt position and how much of that the Centre will absorb. There are plans for another visit to Mumbai by officials.

“In Singapore, there is a high likelihood of meetings with Singapore Airlines and Temasek,” said an industry source. State-owned Temasek is an investment company whose subsidiaries include Singapore Airline, DBS Bank, SingTel, ST Engineering and others.

After the Singapore leg, officials are expected to visit London for yet another round of meetings with investors. Among these could be the representatives of airline companies from west Asia as well.

The issuance of the Air India PIM has been delayed repeatedly. The latest delay is because the 2018-19 financial statement has not yet been approved by the board.

As reported earlier, the government is likely to transfer about Rs 20,000 crore of additional debt from Air India’s books in order to make it lucrative for buyers. The move will leave Air India with about Rs 10,000 crore of debt.

This is a third of Rs 33,992 crore debt that was to be passed on to the new owner during last year’s failed disinvestment process. Potential bidders had expressed inability to take over the debt-laden airline. As of March 31, Air India had a debt of Rs 58,351 crore.

EY has pointed out high debt as one of the reasons why investors didn’t show any interest to acquire the airline last year.