IndiGo to open anchor book today ahead of IPO
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Mumbai: The bidding process by anchor investors for buying equity shares in InterGlobe Aviation Ltd will begin on Monday.
The airline firm plans to raise around Rs.1,000 crore via the anchor investor allocation, also known as the anchor book.
The bidding for anchor investors, including global financial institutions and international private investors, will close by the end of the day.
The promoters of InterGlobe Aviation, owner of India’s most profitable airline IndiGo, will sell 22.82 million equity shares via the initial public offer (IPO) to raise around Rs.3,000 crore.
IndiGo will launch its IPO on 27 October. This will be the largest share sale in the country since 2012 and will give India’s biggest airline a valuation of around Rs.26,000 crore.
The airline has fixed a price band of Rs.700-765 per share for the public issue that will close on 29 October.
The anchor book is that portion of the IPO which bankers can allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the launch of an IPO and is an indicator of institutional investor interest.
Out of the total issue of IndiGo, 50% is available for allocation to qualified institutional buyers or QIBs.
The company may, in consultation with the selling shareholders, allocate up to 60% of the QIB category to anchor investors on a discretionary basis, IndiGo said in a statement last week.
Two persons close to the development, who did not want to be named, said even before the anchor portion was opened for subscription, demand for over eight times the shares available had been received.
“There has been tremendous interest from international investors. Also, the pricing was slightly discounted to its international airline peers,” one of the persons quoted above said.
However, they did not divulge details about the pricing and details about anchor investors
Aditya Ghosh, president and whole time director at IndiGo said: “I am not in a position to comment at this stage.”
Bankers to the IndiGo public issue are Citigroup Global Markets India Pvt. Ltd, JP Morgan India Pvt. Ltd and Morgan Stanley India Co. Pvt. Ltd. The other bankers to the issue are Barclays Bank Plc, Kotak Mahindra Capital Co. Ltd and UBS Securities India Pvt. Ltd.
The airline, founded by travel and aviation veterans Rahul Bhatia and Rakesh Gangwal, is seeking a pre-money equity valuation of about Rs.24,059 crore at the lower end of the price band and Rs.26,293 crore at the higher end of the band.
India has the fastest growing domestic aviation market in the world, ahead of China and the US. The country’s domestic air passenger demand soared 20.2% in the eight months ended 31 August compared with the year-ago period, according to the International Air Transport Association, owing to more flights, fare cuts and faster economic growth.
India is one of the most under-penetrated aviation markets in the world, with around 350 aircraft for domestic service, which is half the size of low fare airline Southwest Airlines Co. of the US.
IndiGo had a total debt of Rs.3,912 crore as of 31 August—all of it was aircraft-related. A portion of the IPO proceeds will be used to reduce this debt.
InterGlobe Aviation posted a record Rs.640.43 crore in quarterly profit for the three months ended 30 June. The airline notched up the profit on revenue of Rs.4,317.19 crore for the quarter, according to the company’s share sale prospectus, which didn’t disclose profit and revenue for the year-ago period.
The airline has reported Ebitdar (earnings before interest, tax, depreciation, amortization and rentals) of Rs.1,577 crore, with an Ebidtar margin of 37%.
In September, IndiGo reported a record net profit of Rs.1,304 crore for the year ended 31 March—a fourfold jump over the previous year—as it benefited from higher passenger traffic and lower jet fuel costs ahead of the initial share sale. The company saw a 25% rise in revenue to Rs.14,320 crore in 2014-15 from Rs.11,447 crore in the previous year.
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