Co-founder Rakesh Gangwal is likely to divest about 3.8 per cent stake in InterGlobe Aviation (IndiGo airline) for about Rs 7,100 crore via bulk deals. This is part of Gangwal’s long-term plan to gradually bring down his stake in India’s largest airline, which he started with Rahul Bhatia in August 2006.
Sources stated that the floor price for the transaction has been set at Rs 4,593 per share, nearly 6 per cent below the last closing price of Rs 4,859.2. Currently, Gangwal and his related entities hold a 19.38 per cent stake in IndiGo.
In the past couple of years, Gangwal and his related entities have been selling stake in IndiGo in tranches. In March this year, he divested a 6 per cent stake in the airline via bulk deals to mop up Rs 6,786 crore.
In August 2023, his wife Shobha Gangwal sold a 3 per cent stake in InterGlobe for about Rs 2,802 crore. In February 2023, they sold a 4 per cent stake for Rs 2,900 crore. Prior to that, in September 2022, they sold a 2.8 per cent stake for around Rs 2,000 crore.
On February 18, 2022, Gangwal resigned from the board of directors of the company, stating that he would gradually reduce his equity stake over the next five years.
Gangwal and co-promoter Rahul Bhatia had been locked in dispute for almost 2.5 years until December 2021. Bhatia and his related entities currently own 35.91 per cent of IndiGo.
The feud between the two promoters – Bhatia and Gangwal – came into the public domain after Gangwal wrote to market regulator Sebi in July 2019, seeking its intervention to address the alleged corporate governance lapses at the company, charges that were rejected by the Bhatia group.
In 2019, both promoters moved the London Court of International Arbitration to resolve their disputes.
The court passed its order on September 23, 2021, following which an extraordinary general meeting (EGM) was called to amend InterGlobe Aviation’s Articles of Association (AoA).
The EGM was held on December 30, 2021. At this EGM, the company’s shareholders approved a special resolution to remove a clause from the company’s AoA which gave its two promoters the power of right of first refusal when one of them wanted to sell his shares.
The passage of the special resolution paved the way for the resolution of a dispute that had been ongoing between Gangwal and Bhatia since July 2019.
IndiGo last month posted a consolidated net profit of Rs 2,728.8 crore for the first quarter of 2023-24 (FY24), which is 11.7 per cent lower than the corresponding period last year, primarily due to rising fuel costs, a few states increasing value-added tax on fuel, higher forex rates, and an increase in maintenance expenses due to grounded aircraft. This is the first time after six quarters that India’s largest airline has posted a decline in its consolidated net profit.
However, it must be noted that the profit in Q1 of 2024 was still the second-highest ever quarterly net profit posted by India’s largest carrier. IndiGo had recorded its highest-ever quarterly consolidated net profit at Rs 3,090.6 crore in the first quarter of 2022-23 (FY23).
First Published: Aug 28 2024 | 7:54 PM IST
