SpiceJet's share sale likely to lure Tata Mutual Fund among others

SpiceJet Ltd.’s $358 million share sale attracted bids from several large investors including Tata Mutual Fund, people familiar with the matter said, providing a lifeline to the Indian airline that has furloughed staff and delayed tax payments.

The carrier, based in Gurugram near New Delhi, also received interest from Authum Investment and Think Investments besides a slew of other institutional investors, the people said, asking not to be identified because the process is private. 

The qualified institutional placement was offered at an indicative price of 61.60 rupees ($0.74) per share, terms of the deal obtained by Bloomberg News showed, a discount of about 21 per cent to Monday’s close to raise as much as 30 billion rupees ($358 million). SpiceJet slid 11 per cent over the next two days and closed 1.1 per cent lower on Thursday in Mumbai.

The Economic Times were among local media that reported earlier in the day that SpiceJet’s share sale was oversubscribed, drawing interest from investors such as Tata Mutual Fund and Think Investments.

SpiceJet didn’t respond to a request for comment. A spokesperson for Tata Mutual, which is run by Tata Asset Management, declined to comment. Representatives for Authum and Think didn’t immediately respond to emailed queries. SpiceJet didn’t respond to a request for comment. 

The budget airline owes payments to airports, has placed staff on leave without pay and withheld mandatory social security payments since January 2022. Auditors of SpiceJet, which has plunged to sixth in domestic market-share rankings from second three years ago, have raised concerns about tax payments. India’s aviation regulator is also increasing scrutiny on the carrier. 

With 37 billion rupees of outstanding lessor and engineering liabilities, SpiceJet entered into a pact with Carlyle Aviation Management Ltd. earlier this month to restructure its lease obligations. 

In an investor presentation on the share sale, SpiceJet said funds would be used to bring grounded aircraft back into service and that it planned to repair and refurbish its fleet. The carrier has an order book of 147 Boeing Co. 737 jets and is considering wide-body operations for Asia-Europe routes, it said.

DAM Capital Advisors Ltd. and JM Financial Ltd. were bookrunners for the share sale, according to a document filed to the exchanges.

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