Gangwal may sell up to 2.8% in IndiGo Airlines for Rs 2,000 cr: Sources

Stake sale being brokered by three investment banks, says another source; Gangwal and his group currently own 36.6% in InterGlobe Aviation, Bhatia's camp owns 38.17%

IndiGo Airlines' co-promoter Rakesh Gangwal is likely to sell up to 2.8 per cent stake in the parent company InterGlobe Aviation through block deals for about Rs 2,000 crore, sources said on Wednesday.

On February 18, Gangwal had resigned from the board of directors of the company, stating that he will gradually reduce his equity stake over the next five years.

Gangwal and his related entities currently own 36.6 per cent in InterGlobe Aviation. The other co-promoter Rahul Bhatia and his related entities currently own 38.17 per cent in it. Gangwal and Bhatia had been locked in dispute for almost 2.5 years till December 2021.

"Rakesh Gangwal and his entities plan to sell up to 2.8 per cent stake via block deals at a price of around Rs 1,850 per share," a source stated on Wednesday. When the BSE closed on Wednesday, The InterGlobe Aviation stock was down 1.87 per cent to Rs 1,983.95, indicating a market cap of Rs 76,468 crore.

Another source said the aforementioned stake sale is being brokered by three investment banks.

A block deal is where shares valued at more than Rs 5 crore or minimum 500,000 shares of a listed company are being sold in one tranche. Neither IndiGo nor Gangwal immediately responded to Business Standard's emailed requests for statements on this matter.

The feud between the two promoters -- Bhatia and Gangwal -- came into public domain after Gangwal had written to market regulator Sebi in July 2019 and sought its intervention to address alleged corporate governance lapses at the company, charges that have been rejected by the Bhatia group.

In 2019, both the promoters had moved the London Court of International Arbitration to resolve their dispute.

The court had passed its order on September 23, 2021, following which an extraordinary general meeting (EGM) was called to amend InterGlobe Aviation's AoA (Article of Association).

The EGM was held on December 30 last year. At this EGM, the company's shareholders approved a special resolution to remove a clause from the company's AoA that gave its two promoters the power of right of first refusal when one of them wanted to sell his shares.

The passage of the special resolution paved the way for resolution of a dispute that had been going on between Gangwal and Bhatia since July 2019.

On February 18, Gangwal wrote a letter to board members, stating: "I have been a long-term shareholder in the company for more than 15 years and it's only natural to someday think about diversifying one's holdings. Accordingly, my current intention is to slowly reduce my equity stake in the company over the next five plus years."

Gangwal said he continues to be a big believer in the long-term prospects of IndiGo and more so now with the industry consolidation underway.

"Under this backdrop and in the long-term, Indian aviation should prosper, as in various other parts of the world," he noted.  

While new investors should benefit from the potential future growth in the company's share price, a gradual reduction of his stake will also allow him to benefit from some of the upside, he mentioned.  

"Like any plan, future events may impact my current thinking," he noted.

However, he said he is concerned about the optics of reducing his equity stake even though such transactions can only be undertaken when he does not have any unpublished price sensitive information (UPS).  

"As you are aware, on an ongoing basis, the company provides us information and some of this is UPS. Being a co-founder, co-promoter and director, this issue takes on great significance," he added.

Gangwal said after considerable thought, he sees only one clear path to address this issue.  

"Regrettably, and effective immediately, I am stepping off the Board. Accordingly, I ask that no company information be shared with me..and, having stepped down as a director, there should be no reason to share such information," he said.

"Sometime in the future, I shall consider participating again as a board member," he added.