Rakesh Jhunjhunwala acquires 1.4 % stake in Spicejet

Development comes at a time Airline looking for an investor

Rakesh Jhunjhunwala has acquired 1.4 per cent stake in Kalanithi Maran owned SpiceJet. The debt-ridden Airline's shares closed with 18.36 per cent increase in BSE to Rs 18.24 on Friday. The investment from Jhunjhunwala comes at a time when the promoters of SpiceJet is looking for an investor into the company.

According to Bombay Stock Exchange (BSE's) Bulk deals data Rakesh Jhunjhunwala's asset management firm Rare Enterprises has purchased 75 lakh equity shares worth an aggregate amount of Rs 13.41 crore in low cost airlines SpiceJet.

SpiceJet is the second largest budget carrier in the country behind IndiGo. The Airline, in which promoters holds around 53 per cent, has been scouting for investors for sometime now, but so far it could not find one. The Airline's market cap has been eroding constantly and now it stood at Rs 1,000 crore.

Maran owns 53 per cent in SpiceJet, which will increase further has the promoters converted 6,41,69,000 warrants held in the company into equal number of equity shares of Rs 10 each. The Board of Directors of the company today allotted the equity shares, upon conversion of warrants issued on preferential basis.

Early this month, the Airline said the Company's Board has allotted 4,50,00,000 equity shares to Kal Airways Pvt Ltd and another 1,91,69,000 shares to Kalanithi Maran. The total paid up capital of the company, on September 30, 2014, was 59,94,50,183, after assuming full conversion of warrants and convertible securities.

It may be noted that the company, in March, 2014, has announced that it has allotted 6,41,69,000 warrants, having an option to apply for equivalent equity shares at a price of Rs 20.76 per equity share. The total amount of funds to be infused (including premium) would be Rs 133.22 crore.

With this additional funding, the promoters' holding would increase from the present 53.48 per cent to 58.46 per cent of the expanded capital after the allotment of new shares, added the company management during the time. Earlier, in the financial years 2011-12, 2012-13 and 2013-14, the promoters had infused equity capital to the tune of Rs 130.92 crore, Rs 99.44 crore and Rs 184.27 crore, respectively.

Maran acquired a large stake in SpiceJet four years ago and later bought more to get a majority holding.

The budget carrier needs at least Rs 1,200 crore to stay afloat, according to Centre for Asia Pacific Aviation (CAPA).