Tata Sons will increase its equity in AirAsia India to 49% by buying out stakes owned by Arun Bhatia-led Telestra Tradeplace.
This will help the Indian conglomerate to equal its stakes with its Malaysian partner AirAsia Bhd in the low-cost carrier, even as one of the founding entities Telestra exiting the joint venture. At present, AirAsia Bhd has 49%, Tatas 41.06%, and Telestra 9.94 per cent.
A statement said that Tata Sons has entered into an agreement with Air Asia (India), Telestra Tradeplace and two of the directors of the company, S Ramadorai and R Venkataramanan, to increase its stake in the company by acquiring 7.94% equity stake from Telestra.
Ramadorai, presently AirAsia India Chairman, and Venkataramanan, in their individual capacity will propose to acquire 0.5% and 1.5% shareholding respectively, of Telestra’s remaining 2% equity stake.
“The agreement was entered into on March 14, 2016, and the transaction is proposed to be completed in April 2016, subject to completion of the relevant corporate approvals and processes,” the statement said.
The exit of Telestra comes against the backdrop of Bhatia’s unhappiness over the functioning of low-cost carrier as well as concerns about the control and ownership of the carrier.
There were also allegations that the airline is controlled by its Malaysian partner, even as Indian rules allow foreign airlines to own 49% stake in domestic airlines but management has to be in Indian hands.
AirAsia India started operations in June 2014 with AirAsia Bhd holding%, Tatas 30% and the remaining 21% held by Telestra.
However, in August last year, Tata Sons increased its stake to 41.06% after buying equity from Telestra.
While Tatas were a minority partner in the low cost carrier, it will now hold equal equity as that of its partner. It is to be seen how the situation plays up in the coming days.