Iconic Investor & Bull Rakesh Jhunjhunwala Will Launch Airlines In India: But Why?
India’s ace investor, Rakesh Jhunjhunwala has officially announced his decision to enter into India’s bloodied aviation sector.
So far, the aviation industry is already hammered by the ensuing restrictions around the Covid-19 pandemic.
A New Airline In Horizon
On Saturday, Jhunjhunwala said that he would be promoting a new airline while speaking at a virtual panel discussion organized by investment bank Equirus.
Although, he didn’t divulge further details. He said, “I love when people say you want to be a millionaire and that’s why you are investing in an airline,”.
Jhunjhunwala, also known as a ‘big bull’, runs the private equity and asset management firm Rare Enterprises.
He said, “I like that kind of attitude when I do something,” he quipped.
Plan To Back A New Airline
According to an estimation, Jhunjhunwala’s net worth is in excess of $4 billion.
He has a shareholding of about 5% in jewelry to perfume maker Titan Company Limited is alone worth $1 billion.
During the discussion, Jhunjhunwala said, “By the way, one-third of my wealth is in unlisted equities. I also invested in 14 to 15 companies and am now promoting a new airline,”.
Prior to this, during mid-July, reports mentioned that Jhunjhunwala “is understood to be exploring a plan to back a new, low-fare airline venture”.
He had also held “preliminary talks for an investment of up to $35 million” in the airline.
In the past, he has placed bets on listed domestic airline stocks of IndiGo, Jet Airways and SpiceJet.
He had famously grilled the top brass of InterGlobe Aviation, the owners of IndiGo, for their poor performance in May 2017.
Not A Perfect Time – Analysts Say
Considering the ongoing pandemic, Indian airlines had seen net losses of Rs 21,000 crores in FY21, as per the rating agency ICRA.
Further, ICRA estimates a net loss of Rs 12,700 crores for domestic carriers in FY22, as the industry debt level increasing to Rs 50,000 crores approximately.
According to Jitender Bhargava, the former executive director of Air India, “the environment is simply not conducive for any new carrier to get into the Indian market,”.
The head of operations for Sarin & Co., an Indian law firm specializing in aircraft leasing and finance, Vinamra Longani said in a tweet, “unless you have passion, determination, risk appetite, deep pockets and patience like the Tata Group, do not invest in an airline in India,”.
Further adding, “If you do, the unending competition, cheap fares and high costs will in all likelihood drive you to an unfortunate end.”
On the other hand, Jhunjhunwala seems unperturbed by the ground realities saying “I like to look at things in a very broad way,”.
He proudly said, “People call me by various names—sometimes big bull-like Harshad Mehta, then Warren Buffet. I don’t know what I am, but I am what I am.”