Kingfisher plans 25% stake sale

Vijay Mallya's Kingfisher Airlines is believed to be discussing stake sale with three foreign airlines — British Airways, Singapore Airlines and Virgin — as a strategic investment is expected to fetch better valuation compared to the numbers indicated by PE investors.

The airline is holding exploratory talks with international carriers for diluting up to 25% stake. The move comes as the Centre is reportedly planning a policy change to allow foreign airlines to invest in domestic carriers with a cap of just below 26%.

The civil aviation ministry had met the airlines on October 30 to discuss key policy changes including allowing foreign airlines to pick up stake in domestic carriers. This meeting has triggered expectation that the government may allow the foreign carriers to buy equity in Indian companies. It must be mentioned that while foreign airlines are not allowed to pick up equity in aviation companies, other institutions and foreign investors are free to hold up to 49% stake.

Read more in The Economic Times article.

Deccan, Kingfisher to merge in 3:7 ratio

The Deccan Aviation board, at a meeting held today, appointed April 1, 2008 as the date for merger with Kingfisher Airlines.Subsequently, Deccan Aviation will be known as Kingfisher Airlines.

"Deccan Aviation shall allot shares in the ratio of three fully paid equity shares of face value Rs 10 each for seven equity shares of Rs 10 each held in Kingfisher Airlines," Deccan's release to the Bombay Stock Exchange said today.

The share entitlement ratio has been determined based on the recommendation of independent valuers KPMG India and Dalal & Shah.Deccan's charter business would be sold to an entity to be jointly owned by Captain Gopinath and the UB Group, the release added.

UB group ups stake in Deccan Aviation by 3%

UB group has increased its stake in low-cost airline firm Deccan Aviation by almost 3% through market purchases, stock exchange data showed on Wednesday.UB group firm Kingfisher Radio, that runs Kighfisher Airlines, purchased a total of four million shares (2.95%) on Wednesday on BSE and NSE combined at Rs 275 each.Most of the shares were purchased from Money Matters Advisory and Money Matters (India), according to the BSE and NSE data.

With these purchases, Kingfisher Radio and other group companies of UB group have increased their stake to almost 49%.In September, UB group had made an open offer to the shareholders of Deccan Aviation at Rs 155 a share for a 20% stake.Last week, Deccan Aviation had announced it would merge the airline operations of Kighfisher Airlines with it.

Mallya buys 50% in Epic Aircraft

Vijay Mallya, chairman, United Breweries (Holdings, has bought a 50 per cent strategic stake in Epic Aircraft for $120 million (about Rs 480 crore)), according to a statement by the UB Group.Mallya, whose UB Group owns the full-service carrier Kingfisher Airlines and also has a 26 per cent in Deccan Aviation (which owns budget carrier Air Deccan), has made the investment in Epic in his personal capacity.

Epic Aircraft, a unit of Aircraft Investor Resources LLC, manufactures private business jets with single and twin engines, capable of carrying six to seven people.While Mallya’s initial focus would be on the US market, which is the largest with 11,000 of 14,000 business jets in the world, he will also use this acquisition to tap the business jets market in India.

As India Inc looks to acquire assets abroad, its CEOs are looking for corporate jets that will fly them to destinations quicker and more comfortably.

Last year, licences were given to 100 people for import of private jets. India has about 150 business jets and it is expected that about 500 would be added in the next 4-5 years.

The US Federal Aviation Administration (FAA) has yet to certify Epic’s planes. According to sources, Mallya plans to take the help of Airbus to speed up the certification process.

Epic Aircraft hopes that its single-engine turboprop, dubbed Epic Dynasty, will be certified by Canada next year, and it hopes to get certification from the US FAA thereafter.

Read more in The Economic Times article.

Mallya to buy $200 million stake in Epic

Billionaire Vijay Mallya, who also owns Kingfisher Airlines, plans to pick up a personal, controlling stake in Epic Aircraft, a US-based aircraft manufacturing company, for at least $200 million (Rs820 crore).Epic Aircraft is a manufacturer of private business jets with single and twin engines, capable of carrying six to seven people.

“I am in talks with Epic promoter,” said Mallya, confirming the proposed Epic investment , even as he announced plans to acquire the Spyker Formula 1 autoracing team for €80 million (Rs448 crore) from Spyker Cars NV.

Epic Aircraft had recently entered into the very light jet (VLJ) space, offering high-end business jets. According to recent statements from the company, it has secure orders for some $63 million worth of its aircraft at two recent shows in Florida and Wisconsin, where the company introduced its VLJs, the single-engine Victory and the twin-engine Elite. The aircraft are powered by engines from Williams International and Pratt & Whitney.

Read more in The Livemint article.

UB likely to put 20% aviation biz on block

United Breweries (Holdings) is planning to sell about 20% stake in its consolidated aviation business—comprising Kingfisher Airlines and Air Deccan—to private equity investors. It hopes to raise around $250 million through the equity dilution. Four private equity giants, including Cerberus Capital, TPG and Blackstone, have initiated talks. Cerberus is believed to be the front-runner.

The stake, sources said, is being sold in a subsidiary of UB (Holdings), which owns 83% of Kingfisher Airlines and 100% of Kingfisher Radio. Kingfisher Radio, in turn, holds 26% in Deccan Aviation, the parent of the low-cost airline. The proposed open offer, if successful, will take Kingfisher Radio’s stake in Deccan Aviation to 46%.

Read more in The Economic Times article.

SpiceJet denies move to offload stake

Low-cost carrier SpiceJet, which is being eyed by other airlines including Vijay Mallya’s Kingfisher, on 18 June denied any move to offload stake, and said it has adequate resources to fund expansion plans.

“SpiceJet would like to reiterate that there is absolutely no plan to sell any stake in the company to anybody. It is one of the best funded airlines in the country with a large cash reserve for expansion,” an airline spokesperson said in a statement.
SpiceJet Director Ajay Singh said SpiceJet’s promoters can’t sell their stake until February 2008, according to an agreement between them.

Royal Holding Services, which owns 12.91% of SpiceJet, is one of the founders of the airline, along with investors such as Singh, who has a 4.16% stake, according to the SpiceJet Web site. Istithmar holds 13.42% in the airline.Shares of SpiceJet advanced Rs 2.2, or 3.8%, to 59.65 at the close of trading on the Bombay Stock Exchange today, having risen as much as 6% earlier.

Read more in The Livemint article.

Paramount Airways woos GoAir for buyout

After Air India-Indian Airlines, Jet Airways-Sahara and Kingfisher-Deccan Aviation, another aviation merger is in the air.

Madurai-based Paramount Airways is interested in acquiring the Mumbai-based budget carrier GoAir, promoted by the Wadia group.

Sources close to the developments said the investment bankers of Paramount Airways have expressed their interest and initiated discussions with GoAir representatives. The talks, however, have not made much headway as yet as GoAir is reluctant to move ahead.

Paramount Airways, which currently operates only in south India, has firmed up plans to enter the western region. GoAir has only four leased aircraft but Paramount is more interested in its slots, parking bays, pilots and other infrastructure, sources said.

GoAir had earlier indicated its plan to dilute 26-40 per cent equity through a private equity placement.

Read more in The Economic Times article.

Kingfisher-Deccan eye Rs 300cr savings-Video

Kingfisher Airlines and Deccan Aviation will save Rs 300 crore in the first full year of operation by working together, Vijay Mallya chairman of the UB Group, said at a press conference here today.

The savings would come from a common sharing of engineering services, spares, employees, pilots, other crew, and ground-handling facilities.

The combined revenue of Kingfisher and Air Deccan airlines in FY07-08 is estimated at Rs 6,000 crore. Mallya said, “We will soon see a net profit in Deccan Aviation. Together, the two airlines account for 50 % of the deployed capacity of south India. Mallya said Kingfisher was expected to make an operational profit in FY08 and net profit in FY09.

For the time being, the two airlines will continue to be run independently, but would work out an optimal route strategy, wherever possible.

Deccan Aviation will continue to be run as a low-cost carrier. Mallya, however, said there was no immediate plans to raise fares though he added that consumers could not hope to get fares at levels where the airlines were making a loss. However, the combined entity can offer competitive air fares owing to cost savings of Rs 300 crore.

Read more in The Business standard article.

Mallya nets 26% Air Deccan stake for Rs 550cr

Vijay Mallya today moved decisively towards controlling the largest share of the domestic aviation market. His UB Holdings, the parent company of Kingfisher Airlines, is acquiring 26 per cent of Bangalore-based Deccan Aviation’s equity for close to Rs 550 crore, pegging its valuation at Rs 2,200 crore.

The markets, anticipating this, boosted the stock of Deccan Aviation, which runs India’s first low-cost carrier Air Deccan, by 11% to Rs 146 at the close of trade on Bombay Stock Exchange. The offer of Rs 155 a share represents the 26-week average.

Deccan has 18% share of the market and Kingfisher close to 11%. Market leader Jet Airways as 25%.

Deccan Aviation is making a preferential allotment of a little over 35 million shares to UB, after which UB will be required under the law to make an open offer for another 20% at the same price. If the offer is fully subscribed, UB will have to pay another Rs 425 crore to take its total holding to 46%.

Read more in The Business Standard article.

Anil boarding Air Deccan?

On Thursday, the Street was abuzz with a strong rumour that the pioneer of low-cost aviation could be within striking distance of a deal with Reliance’s Anil Dhirubhai Ambani Group (ADAG). Industry sources in the know of Gopinath’s talks with various investors said a final word is still some time away.

Gopinath is in the process of raising $75-100 million for the expansion of his business. He has revealed he could dilute between 15 and 26% stake of his airline to a suitable professional (not strategic) investor.An analyst said the rumour was sparked by Capt Gopinath’s Mumbai visit, from moving on to London.

Meanwhile, analysts are putting one and one together and speculating that Capt Gopinath could well be opening talks with Kingfisher Airline chairman Vijay Mallya, who, on Wednesday, sealed an acquisition deal with Scottish whisky maker Whyte & Mackay.

Industry sources ruled it out saying “It is not in that connection.” Gopinath has publicly spurned Mallya’s interest in his carrier, saying Mallya should mind his own business.

Read more in DNA Money article.

Air Deccan rules out sale to beer billionaire, Vijay Mallya

Air Deccan, India’s largest low-fare carrier, on 8 May ruled out a sale to billionaire Vijay Mallya, saying a combination of the two airlines would make no cultural or business sense.Gopinath, who is known to his airline employees as Captain Gopi, said there was “absolutely” no chance of Air Deccan selling a stake to Kingfisher.

Still the bespectacled, low-key entrepreneur said he got along well with Mallya, a flaymboyant tycoon who has named his airline after the flagship beer brand of his UB Group.Mallya said on 7 May in New Delhi, at a press conference with Airbus Industries, that he was interested in buying Air Deccan but an acquisition was not imminent.
Air Deccan last week denied media reports that it was in talks with Kingfisher Airlines.

A deal would create an airline that would control 38% of India’s domestic aviation market, overtaking the 33% share of Jet Airways, which last month bought rival Air Sahara for Rs14.5 billion.

Read more in The Live Mint article.