Ending all speculation, InterGlobe Aviation Ltd., which operates passenger airline IndiGo, on Tuesday filed a draft red herring prospectus (DRHP) with the Securities Exchange Board of India (SEBI) seeking its approval to launch an initial public offering (IPO) to raise funds.
Two other companies — staffing firm Teamlease and e-commerce firm Infibeam — also filed DRHP on Tuesday. They are likely to raise around Rs.450 crore each.
IndiGo, which started operations in 2006, has emerged as India’s biggest airline by domestic market share with a fleet of 96 aircraft.
The promoters of the company include Rahul Bhatia, the U.S.-based non-resident Indian Rakesh Gangwal, Acquire Services Pvt. Ltd. and EnterGlobe Interprises Ltd.
The issue will consist of a fresh issue aggregating up to Rs.1,272 crore (approximately $200 million) and an offer for sale (OFS) of up to 3.01 crore equity shares valued at approximately $200 million by certain selling shareholders of the company. In all, the company is expected to raise $400 million (Rs.2,500 crore). The IPO has been in the pipeline for more than four years.
“Indigo’s IPO will positively rerate the sector and allow another one or two airline IPOs to follow. This IPO will be the first big listing after Jet Airways’ 2005 successful IPO. We expect that Indigo’s IPO will bring retail investors back to the airline sector,” said Kapil Kaul, Chief Executive Officer, South Asia, Centre for Asia Pacific Aviation (CAPA).
He said almost all airline IPOs since 1990s have hurt the investors especially the small investors significantly and Indigo’s IPO is expected to restore investor’s confidence on the aviation sector.
As per CAPA, IndiGo is estimated to have reported net profit of $150 million (Rs.960 crore) to $175 million (Rs.1,120 crore) in 2014-15.
“IndiGo saw strong growth in total revenue in 2014-15 which crossed $2.5 billion (Rs.16,000 crore). Based on projected growth this should bring it to within striking distance of Jet Airways’ topline by the end of 2015-16. The carrier is estimated to have posted a record profit of $150-175 million in 2014-15 representing a net margin of 6 to 7 per cent,” CAPA India said in its recent aviation outlook for 2015-16.
