IndiGo shrugs off negative net worth worries

IndiGo shrugs off negative net worth worries

Ahead of its initial public offering (IPO), the first by an aviation company in nearly a decade, InterGlobe Aviation, which owns India’s most profitable airline IndiGo, has shrugged off concerns over the company’s negative net worth as of June 30, 2015.

“We had a negative net worth on June 30, 2015, the day when we filed the red herring prospectus. We are comfortable that from July 1, we have positive net worth,” InterGlobe Aviation president and executive director Aditya Ghosh said.

InterGlobe Aviation, in its red herring prospectus had stated that it had a negative net worth of Rs 139.39 crore as at June 30, 2015, and that if this financial position continues, it may make it more difficult or expensive for the company to obtain future financing or meet its liquidity needs. It had also stated that there can be no assurance that the company will be able to achieve a positive net worth in periods going forward.

Meanwhile, the company has fixed a price band of Rs 700-Rs 765 for its initial public offering which opens on October 27.

The issue consists of a fresh issue aggregating up to Rs 1272.2  crore and offer for sale of up to 2,61,12,000 shares comprising of 32,90,419 equity shares by InterGlobe Enterprises; 30,06,000 shares by Rahul Bhatia; 37,59,638 shares by Rakesh Gangwal; 6,01,200 shares by Anil Chanana; 1,49,900 shares by Asha Mukherjee, 3,00,600 Shares by Kunal Chanana, 60,12,000 shares by Newton Bruce Ashby; 1,00,200 shares by Sanjay Kumar; 84,000 shares by Shakti Swarup Lumba; 22,27,316 shares by Shobha Gangwal; 14,42,000 shares by Steven Eugene Harfst; 15,03,000 shares by Paul Carl Schorr, Iv (Nominee Of G5 Investments) and 36,35,727 shares by The Chinkerpoo Family Trust.

“We plan to raise around Rs 1,200 crore and most of that, around Rs 1,100 crore, will go towards retiring the Rs 3,912 crore debt for aircrafts,” Ghosh said.

The aviation company is currently flying 97 aircraft and serves 33 domestic destinations and has plans to increase that to 111 by March 2016, 134 by March 2017, and 154 by March 2018.

Asked why the company is going public, Ghosh said that it will help improve the corporate governance standards in the company. “Listing will bring about higher corporate governance standards, and it also makes sure that we are constantly competing,” Ghosh said.

“The credit rating also improves due to the listing helping us to stand up better before lenders,” Ghosh added.

The global coordinators and book running lead managers to the issue are Citigroup Global Markets India, JP Morgan India and Morgan Stanley India.

The book running lead managers are Barclays Bank, Kotak Mahindra Capital Company and UBS Securities India.

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