IndiGo heads towards $400 mn IPO as air travel booms

Will file its draft prospectus by the end of May, say sources

India's biggest carrier, IndiGo, is preparing to file documents for a stock listing to raise $300 to $400 million, two sources with knowledge of the plans said, as it looks to cash in on a booming air-travel market.

While the draft prospectus is due to be filed in the next two months, the timing of the initial public offering has not been set, another person said, and will depend on market conditions. The people declined to be named because they were not authorised to speak to the media.

IndiGo, owned by hospitality and travel company InterGlobe Enterprises, has built a profitable base helped by its low-cost model using a single type of narrow-body planes. By contrast, rivals like SpiceJet and Air India are losing money - even as millions more Indians travel each year - due to high operating costs and tough competition that has kept fares among the lowest in the world.

IndiGo, founded in 2006 by travel entrepreneur Rahul Bhatia and ex-US Airways chief executive Rakesh Gangwal, has increased its share of India's overall domestic air travel market to a third. Its success story could make it an attractive investment, company watchers say.

"Crude prices have also fallen, so there would be good demand for its IPO," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.

Even IndiGo, however, has not been immune to the cut-throat competition that has seen losses almost double for the industry as a whole. Its pre-tax profit halved to Rs 478 crore ($76 million) in the last financial year.

IndiGo has picked Citigroup, Kotak Investment Banking, Morgan Stanley and JP Morgan Chase as lead managers for the listing, as well as UBS and Barclays, the two sources said.

The carrier did not immediately respond to a request for comment.