Tweak in shareholding structure likely to up foreign investments in IndiGo Airlines
Ahead of Initial Public Offer (IPO), the promoters of IndiGo airlines have decided to tweak the shareholding structure with an aim to create space for foreign investors. With this, US-based NRI Rakesh Gangwal, who was holding 47.88% stake in IndiGo airlines through Virginia-based company-Caelum Investments, will now hold a majority share of the airlines. A decision in this regard followed merger of Caelum Investments with InterGlobe Aviation (which operated the airlines by holding 51.12% stake), the process for which began last year when InterGlobe Aviation filed an application in the Delhi High Court seeking consent for a merger with Caelum Investments. Caelum Investments’ stake in the airlines was deemed as foreign investment and the promoters could have had lesser chance to offer shares for foreign investors without a change in shareholding structure. Now, a change in shareholding structure provides an opportunity for the promoters to allow more foreign investments and this is necessitated by the fact that ‘Rakesh Gangwal is an NRI and under current norms, NRIs will be allowed to make 100% investment in an airline,’ while government’s FDI rules restrict foreign investment in domestic airlines to just 49%.’ Here it is noteworthy to mention that ‘since the Foreign Investment Promotion Board (FIPB) approved InterGlobe Aviation’s proposal to reclassify 49% stake of promoter Rakesh Gangwal in IndiGo as NRI stake from FDI, Qatar Airways has been requesting IndiGo for permission to buy 49% in the airline, which IndiGo has been royally ignoring, as reported by The Dollar Business earlier. IndiGo’s promoters are all set to file for IPO to raise about Rs 2500 crore through sale of stake and fresh issue of shares, which is expected to be out late July.
June 17, 2015 | 10:15 pm IST.
to success.