IndiGo co-founder Rakesh Gangwal will sell up to a 2.8 per cent stake in Aviation- which owns and operates IndiGo, through a block deal. The total deal value is estimated to be Rs 1,996 crore, according to the term sheet seen by ET.
The offer, managed by Morgan Stanley India, Goldman Sachs and JP Morgan, will mark the beginning of the reduction of Gangwal’s shareholding in India’s largest and most profitable airline. Gangwal, his wife Shobha and their family trust together own 36.6 per cent stake in the company.
The shares will be sold at Rs 1,850 a share — a discount of 6.5 per cent to its closing price on Wednesday. A host of institutional investors are expected to participate in the offer.
According to the terms of the sale, the Gangwal family will have a lock-up period of 150 days before selling or redeeming any share. Analysts tracking the company however, said that despite a lock-up period of 150 days. “150 days is too short a period. Such consistent share selling will weigh heavily on the share price,” an analyst said on the question of anonymity.
According to the terms of the transaction, the shares will be sold at Rs 1,850 a share — a discount of 6.5 per cent to its closing price on Wednesday. A host of institutional investors are expected to participate in the offer.
In February, besides stepping down from the company’s board, Gangwal announced his decision to slowly reduce his stake in the company. The announcement came after a two-year long bitter battle with co-promoter Rahul Bhatia who owns 37.8 percent.
The two promoters fell apart in 2019 on allegations of governance lapses resulting in an inquiry by the Securities and Exchange Board of India (Sebi) and arbitration in London.
“I have been a long-term shareholder in the company for more than 15 years and it’s only natural to someday think about diversifying one’s holdings.
Accordingly, my current intention is to slowly reduce my equity stake in the company over the next five-plus years. While new investors should benefit from the potential future growth in the company’s share price, a gradual reduction of my stake should also allow me to benefit from some of the upsides,” Gangwal then wrote in his letter to the board.
The company modified the articles of association to scrap the clause which gave them the right of first refusal over each other’s shares. The amendment was made following an order from the London Court of International Arbitration and passed in a shareholders’ meeting last December.
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