IndiGo's anchor book mops up Rs 832 crore

Highest-ever collection via this route; Rs 3,136-crore IPO opens today

InterGlobe Aviation, the company that operates the country's most-profitable airline, IndiGo, raised Rs 832 crore on Monday from 43 anchor investors, ahead of its Initial Public Offering (IPO) of equity.

The move will give a boost to the New Delhi-based company's Rs 3,136-crore IPO, biggest in nearly three years.

InterGlobe allotted 10.88 million shares at Rs 765 apiece, top end of the price band. InterGlobe will sell another 19.24 million shares in its IPO, in a price range of Rs 700-765 a share.

The anchor investors included marquee foreign institutional ones such as US-based asset management company Fidelity, sovereign wealth fund of the government of Singapore and US-based investment bank Goldman Sachs. Domestic institutions included HDFC AMC, DSP BlackRock Mutual Fund and Sundaram Mutual Fund.

"The IPO committee of the board of directors at its meeting held on October 26 has finalised allocation of 10,876,215 equity shares to anchor investors at Rs 765 per equity share… aggregating to an amount of Rs 8320.3 million," the company said.

At Rs 765, InterGlobe will be valued at around Rs 27,000 crore, making it one of the world's most valuable low-cost air carriers.

The issue comprises a fresh equity sale component of around Rs 1,272 crore, to be used for retirement of debt and purchase of ground equipment. The remaining issue is Offer for Sale by the owners.

IndiGo had debt of Rs 3,912 crore at end of the June quarter, all of which is related to aircraft acquisition.

Though market players have raised concerns over the IPO pricing, IndiGo said the valuations sought were not steep in comparison with other well-run airlines abroad.

Also several analysts and experts are questioning the generous dividend payout to the promoters, especially before the run-up to the share sale. However, the airline management defended its policy and said the investors were unfazed by the dividend payout.

"We are generating cash flows and we are profitable. We hardly have a capex requirement. We did not declare a dividend in financial year 2012, though we were profitable because we felt it was more prudent to keep cash in the company. Going forward, our view will be the same - do what is in the best interest of the business and keep shareholders in focus. In any case, we have paid interim dividends every year. With regard to the negative net worth, it was as of that date, and we are back in positive net worth zone," IndiGo president Aditya Ghosh said last week in response to investor criticism.

Launched in 2006, IndiGo is co-owned by the Rahul Bhatia-promoted InterGlobe Enterprises and airline sector veteran Rakesh Gangwal. Pre-IPO, the promoters held 93.41 per cent of the equity capital, individually and through group companies. Earlier, they held 99 per cent stake; their shareholding has reduced after conversion of certain preferential shares allotted to top current and former executives. While Bhatia owns 48 per cent in the airline, Gangwal holds 45 per cent.

The InterGlobe IPO is being managed by Citigroup Global Markets, JP Morgan, Morgan Stanley, Barclays Bank, Kotak Mahindra Capital and UBS Securities.