Co-founder Rakesh Gangwal to further pare down his stake in IndiGo

3.8 per cent stake for Rs 7.1k crore on sale via block deals: Sources

Co-founder Rakesh Gangwal is likely to divest about 3.8 per cent stake in InterGlobe Aviation (IndiGo airline) for about Rs 7,100 crore via bulk deals. This is part of Gangwal's long-term plan to gradually bring down his stake in India's largest airline, which he started with Rahul Bhatia in August 2006.

Sources said that the floor price for the transaction has been set at Rs 4,593 per share, nearly 6 per cent below the last closing price of Rs 4,859.2. Currently, Gangwal and his related entities hold 19.38 per cent stake in IndiGo.

In the past couple of years, Gangwal and his related entities have been selling stake in IndiGo in tranches. In March this year, he divested 6 per cent stake in the airline via bulk deals to mop up Rs 6,786 crore.

In August 2023, wife Shobha Gangwal had sold a 3 per cent stake in InterGlobe for about Rs 2,802 crore. In February 2023, they sold a 4 per cent stake for Rs 2,900 crore. Prior to that in September 2022, they sold 2.8 per cent stake for around Rs 2,000 crore.

On February 18, 2022, Gangwal had resigned from the board of directors of the company, stating that he will gradually reduce his equity stake over the next five years.

Gangwal and Bhatia had been locked in a dispute for almost two-and-half years till December 2021. Bhatia and his related entities currently own 35.91 per cent in IndiGo.

The feud between the two promoters came into public domain after Gangwal had written to market regulator Securities and Exchange Board of India (Sebi) in July 2019 and sought its intervention to address alleged corporate governance lapses at the company, charges that have been rejected by the Bhatia group.

In 2019, both the promoters had moved the London Court of International Arbitration to resolve their dispute.

The court had passed its order on September 23, 2021, following which an extraordinary general meeting (EGM) was called to amend InterGlobe Aviation's AoA (Article of Association).

The EGM was held on December 30, 2021. At this EGM, the company's shareholders approved a special resolution to remove a clause from the company's AoA, which gave its two promoters the power of right of first refusal when one of them wanted to sell his shares.

The passage of the special resolution paved the way for resolution of a dispute that had been going on between Gangwal and Bhatia since July 2019.

IndiGo had last month posted a consolidated net profit of Rs 2,728.8 crore for the first quarter of 2023-24 (Q1FY24), which is 11.7 per cent lower than the corresponding period of the previous year, primarily due to rising fuel costs, a few states increasing value-added tax on fuel, higher forex rates, and an increase in maintenance expenses due to grounded aircraft. This is the first time after six quarters that India's largest airline has posted a decline in its consolidated net profit.

However, it must be noted that the profit in Q1FY24 was still the second-highest ever quarterly net profit posted by IndiGo. The airline had recorded its highest-ever quarterly consolidated net profit at Rs 3,090.6 crore in the first quarter of 2022-23 (Q1FY23).