IndiGo rejigs ownership structure ahead of IPO

Move aimed at giving more headroom to foreign investors

IndiGo’s promoters have tweaked the airline’s shareholding structure to create headroom for roping in foreign investors. US-based airline veteran Rakesh Gangwal, who held 47.88 per cent in the airline through US-based Caelum Investment, will now hold this stake in his personal capacity.

The changes followed the merger of Caelum Investment with Interglobe Aviation, which operated the airline, IndiGo said in a filing with the Registrar of Companies.

The changes, carried out through the past few months, were necessitated because government rules cap foreign investment in domestic airlines at 49 per cent. The move, observers say, is aimed at enabling the sale of shares to foreign investors through a possible initial public offering (IPO).

Gangwal is a non-resident Indian and under current norms, NRIs are allowed up to 100 per cent investment in an airline. Gangwal, the former chief executive of US Airways, is considered the brains behind Indigo’s success. Since the airline’s inception, Caelum has held 47.88 per cent stake, while Delhi-based Rahul Bhatia owned 51.12 per cent in the no-frills airline.

The airline’s share capital remains unchanged and Bhatia and Gangwal retain the same number of shares as earlier.

Caelum Investment’s equity stake in the airline was deemed as foreign investment and there would have been little headroom for promoters to offer shares to foreign investors without tweaking the shareholding structure.

IndiGo’s promoters are set to file for an IPO to raise about $400 million (Rs 2,500 crore) through sale of stake and fresh issue of shares. According to a television report, a draft red herring prospectus will be filed on June 30. Six bankers — Citigroup, Kotak, Morgan Stanley, JP Morgan Chase, UBS & Barclays — were appointed book runners for the IPO, the report added.

Akbar Al Baker, the chief executive officer of Qatar Airways, has repeatedly expressed interest to invest in the airline.

IndiGo did not respond to email queries on changes in the shareholding structure.

The process to change the shareholding structure was set in motion last year, with InterGlobe Aviation (IndiGo Airlines’ registered name) filing an application in the Delhi High Court, seeking consent for a merger with Caelum Investment LLC. The application was allowed in a July 4 order by the court.

According to IndiGo’s filing with the corporate affairs ministry in April, the board of IndiGo had approved the “allotment of shares to the members of Caelum Investment LLC, pursuant to implementation of the scheme of amalgamation.” Accordingly, 147,000 shares of Rs 1,000 each were allotted to Gangwal.