As per the newest reports coming in, Spice Jet promoter Ajay Singh is planning to bid on the Air India airline. For this, he is reportedly putting together a war chest of $1 billion and two United States (US)-based funds.
Tata Group’s interest in the acquisition of state-owned Air India is quite well known to us, and it seems like Tata will be going up against Spice Jet for this acquisition.
Spice Jet’s Ajay Singh To Bid On State Owned Air India?
As per reports, the bid by Spice Jet’s Ajay Singh will be made through a special purpose vehicle (SPV). Also, Singh’s contribution to it would be about $300 million. Apparently, he will be raising this amount by using a combination of his shares in the listed company and equity that will be assigned to him as a part of a planned hive-off of his airline’s cargo business as security.
The other two US-based funds will probably contribute the remaining sum of $700 million. As per reports, Singh will maintain a minimum of 26 per cent shareholding in the said SPV.
As of now, Singh owns around 60 per cent of the Spice Jet airline, as per the latest available disclosures, with more than a third of his stake being encumbered.
Singh To Compete Against Tata Sons For Air India Acquisition
This puts Singh against Tata Sons in the competition to acquire the Government’s cent per cent stake in Air India, which is led by N Chandrasekharan, the only qualified bidder for the airline presently.
As we reported to you earlier, Tata Sons have roped in the consulting firm called Bain and Company to shoulder the entire process of research and analysis that is carried out before an acquisition, investment, business partnership, or bank loan, to determine the value of the intended subject. It also is carried out to identify if there are any issues involved.
Recently, Spice Jet announced that it is going back to its previous pay structure wherein employees were paid based on hours worked. It also said that some employees may receive a “graded deferment” of up to 35%.
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