Best endeavour should be to list AI 3 years after sale: DIPAM Secy

The government today said the entity which will buy national carrier Air India should look at listing it on the stock exchanges three years after the acquisition.

The government today came out with the preliminary information memorandum inviting bidders to buy 76 per cent stake in loss making Air India along with transfer of management control.

"It is suggested that the best endeavour should be to list it three years after acquisition and government will be retaining some stake. Government will also participate in listing process," Department of Investment and Public Asset Management (DIPAM) Secretary Neeraj Gupta said.

The bid document talks about a lock-in of three years and also mentions that the government intends to divest its residual shareholding through the process of "dispersed disinvestment (i.e. would not be sold as a block)".

"The confirmed selected bidder may be required to list AI on such terms as may be prescribed in the RFP. GOI may support such listing through proportionate offering in the listing process...," the document said.

The information memorandum said the transaction will involve Air India, its low cost arm Air India Express and Air India SATS Airport Services Pvt Ltd. The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd.

"All the contours of the transaction are in the bid document. 76 per cent stake in AI along with 100 per cent stake in AI Express as well as JV which is AISATS JV stake are bundled into one, and put up for sale," Gupta said.

He further said that non-core assets are being hived off through the SPV which would be separately monetised. "Whatever extra debt we are parking in SPV that will be met from there," Gupta told reporters here.

Wholly-owned subsidiaries like AIATSL involved in ground handling and cargo handling services and AIESL which focuses on the maintenance, repair and overhaul of engines and airframe would not be part of the transaction and will be hived off through demerger. Also, AASL which provides connectivity to tier II and III cities in India and also links these cities to metro hubs would not be part of the transaction.

As per the bid document, bidders would be required to have a minimum net worth of Rs 5,000 crore and will have to post profit after tax (PAT) in three of the previous five financial years from the EOI deadline. The last date for submission of the bids is May 14.

The entity acquiring the domestic carrier will have retain the 'Air India' brand for AI's business operations for a minimum specified number of years on terms to be detailed at request for proposal (RFP) stage.