You too can have a share in IndiGo’s success. Here’s how

After having grabbed a lion’s share in the Indian aviation market, IndiGo is now preparing to launch an initial public offer (IPO) of at least $400 million or Rs 2,500 crore in first quarter (April-June) of the next financial year (2015-16).

Sources have confirmed that bankers are working on the IPO at a frantic pace as current market conditions are favourable for going public, especially for a company with a proven track record like Indigo. The air line has not commented on this issue.

Presently, there are only two listed airlines--Jet Airways and SpiceJet. Vijay Mallya's Kingfisher, which shut operations in October 2012, is also listed on the BSE with its Rs 10 face value share quoting at Rs 1.49. However, trading in the Kingfisher stock has been suspended due to penal reasons, reports the ET.

IndiGo is going public to fund its ambitious expansion plan as it has placed orders for 530 Airbus A 320s worth $48 billion with an option for 100 more planes worth $10.2 billion.

At present, when both Jet and SpiceJet are in a sticky wicket, IndiGo is the only profitable airline on Indian sky. To believe the sources, the airline has been preparing for the IPO since last year when it restructured its shareholding and became eligible for foreign direct investment (FDI).

The ET further reports, IndiGo's holding company InterGlobe Aviation was 48% owned by co-founder Rakesh Gangwal's US-based Caelum Investments. This investment fell under the FDI ambit and current rules allow an airline to have only 49% FDI from foreign airlines and companies. To free up the permissible 49% FDI, IndiGo received FIPB's conditional nod to convert Gangwal's 47.9% stakeholding from FDI to investment under "non-resi dent Indian head".

This restructuring enables IndiGo to sell shares to FIIs. It’s consistency in making profit has invited a number of foreign carriers including Qatar to express interest in buying the airline.

Centre for Asia Pacific Aviation India head Kapil Kaul told the ET, "IndiGo continues to be an exceptional performer for the last five years and maintains an outstanding lead in the domestic market. I expect IndiGo to maintain leadership in the near-to-medium term as it has the size and skills required to maintain this leadership. With lower oil prices, double-digit growth likely and upside in ancillaries, profitability strengthening is logical."

(Image: India Times)