Air Works plans Rs 700-cr public offer

Aircraft maintenance firm plans to use proceeds for business expansion

Air Works, India's oldest private sector aircraft maintenance repair and overhaul firm (MRO), is preparing for an initial public offering (IPO) to raise about Rs 700 crore through issue of fresh shares and part stake sale by promoters and existing investors. A source said the company plans to use the proceeds for  expansion. The IPO is expected in 12-15 months, the source added.

Air Works did not respond to an email query seeking its comments.

Founded in 1951 by brothers  B G Menon and P S Menon, Air Works is the largest MRO in India servicing charter and private jets. Over the past few years it has expanded business to other areas such as aircraft painting and asset management with acquisitions of companies in Europe and the Gulf region and its overseas business now contributes about two-thirds of revenue. Last year, it acquired Irish firm Acumen Aviation, which focuses on data management solutions for aircraft owners and lessors.

The Menon family owns about 14 per cent stake in Air Works and the rest is held by GTI Capital,  Punj Lloyd, New Enterprise Associates,  Elephant Capital and its chief executive officer Vivek Gour. “It will be both primary and secondary share sale. The promoters and other investors will sell part of the holding, but will not be exiting the company,” the source added..

“The draft civil aviation policy with its tax concessions and other reforms is favourable for the MRO sector and existing owners see value in staying invested in the company.”

The IPO and offer for sale of existing shares is expected to be on 50:50 basis.

Last October, the company had denied media report that promoters and investors were looking for an exit.

At present, Indian carriers outsource about 90 per cent of their Rs 5,500-crore worth repair and maintenance work to companies abroad. This is partly because of the limited capabilities of domestic service providers and partly because of the high tax structure in India.

The  proposed tax reforms are expected to give a boost to the domestic players. With airlines looking to expand their fleet, the opportunities are only set to grow. Indian carriers have a combined fleet of 440 aircraft and orders for 689 new planes have been placed. Then, there is also the potential to get additional business from owners of private jets and helicopters whose combined number stands at 550.