Wadia Group-controlled GoAir revives IPO plans; looks to raise Rs 1,728-2,074 crore

Diversified conglomerate Wadia Group's budget carrier GoAir has now revived plans for an initial public offering as it looks to raise capital, six independent sources with knowledge of the matter told Moneycontrol.

"GoAir is back in the market and is in talks with investment banks like Citi and Morgan Stanley as well as law firms and will soon finalise its advisors. It is keen on an initial public offer as part of which it plans to raise between Rs 1,728-2,074 crore, though a final call has not been taken on the issue size as the discussions are at a preliminary stage," said one of the sources.

Current market leader IndiGo's public offering in October 2015 was the last IPO in the Indian aviation sector and the company's share price has doubled since then.

The current state of the Indian aviation market is one of the reasons GoAir wants to list itself on the bourses.

"The airline needs to raise money as it has ordered 144 Airbus A320 Neos which are more fuel efficient than its current fleet. There is a void in the market with Jet Airways being grounded and with IndiGo and SpiceJet having high valuations , the GoAir management feels it can get the same multiple," added a second source.

"Considering the proposed size of the IPO, GoAir may also look at tapping overseas institutional investors as well. In terms of timing, as of now, based on the pace of discussions and documentation, the earliest the issue can be launched is December or during the January to March time-frame," a third source told Moneycontrol.

According to the data released by the Directorate General Of Civil Aviation for May 2019, IndiGo is the undisputed leader with a market share of 49 per cent. SpiceJet has bagged the second spot with 14.8 per cent market share. Air India has 13.5 per cent followed by Go Air at 11.1 per cent, Air Asia at 6.3 per cent and Vistara at 4.7 per cent. On the flip side, GoAir leads the pack in terms of on time performance followed by Air Asia and IndiGo.

" GoAir has had a good operational and financial track record. Jet's exit has created an opportunity for existing airlines to continue on the growth trajectory. Public listing is always in the larger interest of the company as it is then subject to the discipline and regulations of the market," said Dhiraj Mathur, former partner and head (aerospace & defence), PwC.

For FY18, Go Airlines' total revenues from operations rose to Rs 4,553.35 crore from Rs 3,524.88 crore in FY17. During the same period, the airlines net profit rose 43.66% to Rs 294.88 crore from Rs 205.25 crore. The airline started international flights in October 2018 and according to reports operates around 1600 weekly flights across a network of 24 domestic and four international destinations - Phuket, Male, Muscat and Abu Dhabi.

In response to a query from Moneycontrol, a GoAir spokesperson said: "As a matter of policy, we don't comment on market speculation."

Citi and Morgan Stanley too declined to comment.